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List Of Passages I Highlighted In My Copy Of “Machinery Of Freedom”

Under any institutions, there are essentially only three ways that I can get another person to help me achieve my ends: love, trade, and force.

By love I mean making my end your end. Those who love me wish me to get what I want (except for those who think I am very stupid about what is good for me). So they voluntarily, ‘unselfishly’, help me. Love is too narrow a word. You might also share my end not because it is my end but because in a particular respect we perceive the good in the same way. You might volunteer to work on my political campaign, not because you love me, but because you think that it would be good if I were elected. Of course, we might share the common ends for entirely different reasons. I might think I was just what the country needed, and you, that I was just what the country deserved.

Love—more generally, the sharing of a common end—works well, but only for a limited range of problems. It is difficult to know very many people well enough to love them. Love can provide cooperation on complicated things among very small groups of people, such as families. It also works among large numbers of people for very simple ends—ends so simple that many different people can completely agree on them. But for a complicated end involving a large number of people—producing this book, for instance—love will not work. I cannot expect all the people whose cooperation I need—typesetters, editors, bookstore owners, loggers, pulpmill workers, and a thousand more—to know and love me well enough to want to publish this book for my sake. Nor can I expect them all to agree with my political views closely enough to view the publication of this book as an end in itself. Nor can I expect them all to be people who want to read the book and who therefore are willing to help produce it. I fall back on the second method: trade.

I contribute the time and effort to produce the manuscript. I get, in exchange, a chance to spread my views, a satisfying boost to my ego, and a little money. The people who want to read the book get the book. In exchange, they give money. The publishing firm and its employees, the editors, give the time, effort, and skill necessary to coordinate the rest of us; they get money and reputation. Loggers, printers, and the like give their effort and skill and get money in return. Thousands of people, perhaps millions, cooperate in a single task, each seeking his own ends. So under private property the first method, love, is used where it is workable. Where it is not, trade is used instead.

The attack on private property as selfish contrasts the second method with the first. It implies that the alternative to ‘selfish’ trade is ‘unselfish’ love. But, under private property, love already functions where it can. Nobody is prevented from doing something for free if he wants to. Many people—parents helping their children, volunteer workers in hospitals, scoutmasters—do just that. If, for those things that people are not willing to do for free, trade is replaced by anything, it must be by force. Instead of people being selfish and doing things because they want to, they will be unselfish and do them at the point of a gun.

Is this accusation unfair? The alternative offered by those who deplore selfishness is always government. It is selfish to do something for money, so the slums should be cleaned up by a ‘youth corps’ staffed via ‘universal service’. Translated, that means the job should be done by people who will be put in jail if they do not do it.

I just highlighted this because it was a beautifully phrased argument.

One of the most effective arguments against unregulated laissez faire has been that it invariably leads to monopoly. As George Orwell put it, “The trouble with competitions is that somebody wins them.” It is thus argued that government must intervene to prevent the formation of monopolies or, once formed, to control them. This is the usual justification for antitrust laws and such regulatory agencies as the Interstate Commerce Commission and the Civil Aeronautics Board.

The best historical refutation of this thesis is in two books by socialist historian Gabriel Kolko: The Triumph of Conservatism and Railroads and Regulation
. He argues that at the end of the last century businessmen believed the future was with bigness, with conglomerates and cartels, but were wrong. The organizations they formed to control markets and reduce costs were almost invariably failures, returning lower profits than their smaller competitors, unable to fix prices, and controlling a steadily shrinking share of the market.

The regulatory commissions supposedly were formed to restrain monopolistic businessmen. Actually, Kolko argues, they were formed at the request of unsuccessful monopolists to prevent the competition which had frustrated their efforts.

So many books I need to read before I can have opinions on things.

It was in 1884 that railroad men in large numbers realized the advantages to them of federal control; it took 34 years to get the government to set their rates for them. The airline industry was born in a period more friendly to regulation. In 1938 the Civil Aeronautics Board (CAB), initially called the Civil Aeronautics Administration, was formed. It was given the power to regulate airline fares, to allocate routes among airlines, and to control the entry of new firms into the airline business. From that day until the deregulation of the industry in the late 1970s, no new trunk line— no major, scheduled, interstate passenger carrier—was started.

The CAB had one limitation: it could only regulate interstate airlines. There was one major intrastate route in the country— between San Francisco and Los Angeles. Pacific Southwest Airlines, which operated on that route, had no interstate operations and was therefore not subject to CAB rate fixing. Prior to deregulation, the fare between San Francisco and Los Angeles on PSA was about half that of any comparable interstate trip anywhere in the country. That gives us a good measure of the effect of the CAB on prices; it maintained them at about twice their competitive level.

In this complicated world it is rare that a political argument can be proved with evidence readily accessible to everyone, but until deregulation the airline industry provided one such case. If you did not believe that the effect of government regulation of transportation was to drive prices up, you could call any reliable travel agent and ask whether all interstate airline fares were the same, how PSA’s fare between San Francisco and Los Angeles compared with the fare charged by the major airlines, and how that fare compared with the fare on other major intercity routes of comparable length. If you do not believe that the ICC and the CAB are on the side of the industries they regulate, figure out why they set minimum as well as maximum fares.

Continuing to have nothing much to say except “wow”.

Defenders of [government health spending] programs argue that the poor are so poor they cannot afford vital medical care. Lurid reports to the contrary, most poor people are not on the edge of literal starvation; evidence indicates that in this country the number of calories consumed is virtually independent of income. If the poor spent more of their own money on doctors, they would not starve to death; they would merely eat worse, wear worse clothes, and live in even worse housing than they now do. If they do not spend very much money on medical care it is because that cost, which they are in an excellent position to evaluate, is too high.

Finally something where I can say something more interesting than wholehearted agreement.

The average cost of treatment for a heart attack is about $15,000. The poverty line for a single person in the US is $11,000. On the one hand, credit cards and loans can make up some of the difference; on the other, heart attacks are by no means even close to the most expensive medical condition. So if we’re talking about actually buying health care then no, the poor literally cannot afford it.

If we’re talking about buying health insurance, I understand a very cheap policy would cost about $2000, so the poor can probably literally afford that. I mean, they don’t have a whole lot of fat to trim, but they can afford it in the sense that if they choose to give up their home and car, and live on the streets, then they can have the health insurance. At least until their job fires them because they don’t have a car and can’t get there, and so they lose the money they were using to pay for it. But they won’t starve to death!

But then, why is starving to death such a uniquely interesting endpoint? Why assume that if the poor would die without health insurance we’re morally obligated to give it to them, but if they wouldn’t, we’re not? If we’re amoral or denying all obligations to help others, why care if the poor starve to death? And if we’re not amoral and feel some responsibility to the poor, why not also be concerned about them having a minimally tolerable life?

If some libertarian doesn’t think we have any obligation to help the poor, I’d rather they just say “Well, the poor might starve to death, but that’s too bad.”

Otherwise it seems sort of misleading to me. Saying “Well, the poor won’t literally starve to death” sounds like you’re saying “Well, it’s not that bad.” But if you were actually saying that, I could respond that it is that bad. It’s just bad in a non-starvation-related way. If you don’t care how bad it is, say so instead of hedging about whether starvation is occurring or not.

The best solution to this problem would be for any state instituting a voucher system to include, as part of the initial legislation, the provision that any institution can qualify as a school on the basis of the performance of its graduates on objective examinations. In New York, for instance, the law might state that any school would be recognized if the average performance of its graduating class on the Regents exam was higher than the performance of the graduating classes of the bottom third of the state’s public schools.

The best answer I’ve ever heard to the question of how to decide who gets school vouchers.

It might be possible to reform our present universities in the direction of such free-market universities. One way would be by the introduction of a ‘tuition diversion’ plan. This arrangement would allow students, while purchasing most of their education from the university, to arrange some courses taught by instructors of their own choice. A group of students would inform the university that they wished to take a course from an instructor from outside the university during the next year. The university would multiply the number of students by the average spent from each student’s tuition for the salary of one of his instructors for one quarter. The result would be the amount of their tuition the group wished to divert from paying an instructor of the university’s choice to paying an instructor of their own choice. The university would offer him that sum to teach the course or courses proposed. If he accepted, the students would be obligated to take the course.

The university would determine what credit, if any, was given for such courses. The number each student could take for credit might at first be severely limited. If the plan proved successful, it could be expanded until any such course could serve as an elective. Departments would still decide whether a given course would satisfy specific departmental requirements.

A tuition diversion plan does not appear to be a very revolutionary proposal; it can begin on a small scale as an educational experiment of the sort dear to the heart of every liberal educator. Such plans could, in time, revolutionize the universities.

At first, tuition diversion would be used to hire famous scholars on sabbatical leave, political figures of the left or right, film directors invited by college film groups, and other such notables. But it would also offer young academics an alternative to a normal career. Capable teachers would find that, by attracting many students, they could get a much larger salary than by working for a university. The large and growing pool of skilled ‘free-lance’ teachers would encourage more schools to adopt tuition diversion plans and thus simplify their own faculty recruitment problems. Universities would have to offer substantial incentives to keep their better teachers from being drawn off into free-lancing. Such incentives might take the form of effective market structures within the university, rewarding departments and professors for attracting students. Large universities would become radically decentralized, approximating free-market universities. Many courses would be taught by free-lancers, and the departments would develop independence verging on autarchy.

Under such institutions the students, although they might have the help of advisory services, would have to take the primary responsibility for the structure of their own education. Many students enter college unready for such responsibility. A competitive educational market would evolve other institutions to serve their needs. These would probably be small colleges offering a highly structured education with close personal contact for students who wished to begin their education by submitting to a plan of study designed by those who are already educated. A student could study at such a college until he felt ready to oversee his own education and then transfer to a university.

It is time to begin the subversion of the American system of higher schooling, with the objective not destruction but renaissance.

One of the better university reform proposals I’ve heard, plus an incremental strategy for achieving it!

I have solved the problem of urban mass transit. To apply rny solution to a major city requires a private company willing to invest a million dollars or so in hardware and a few million more in advertising and organization. The cost is low because my transit system is already over 99 percent built; its essence is the more efficient use of our present multibillion dollar investment in roads and automobiles. I call it jitney transit; it can most easily be thought of as something between taxicabs and hitch-hiking. Jitney stops, like present-day bus stops, would be arranged conveniently about the city. A commuter heading into town with an empty car would stop at the first jitney stop he came to and pick up any passengers going his way. He would proceed along his normal route, dropping off passengers when he passed their stops. Each passenger would pay a fee, according to an existing schedule listing the price between any pair of stops.

Holy !@#$, I think he has solved the problem of urban mass transit. There’s an obvious Uber parallel, but this system seems even better since it’s run by people going that direction anyway and each car will be packed, making the costs probably much cheaper. This is such an obviously good idea that I can only assume that it was regulation and the taxi lobby that prevented it from coming to pass. This paragraph probably did more to raise my confidence that there are extremely good libertarian solutions to important problems that we’re missing out on than anything else in the entire book.

Urban renewal uses the power of the government to prevent slums from spreading, a process sometimes referred to as ‘preventing urban blight’. For middle-class people on the border of low-income areas, this is valuable protection. But ‘urban blight’ is precisely the process by which more housing becomes available to low-income people. The supporters of urban renewal claim that they are improving the housing of the poor. In the Hyde Park area of Chicago, where I have lived much of my life, they tore down old, low-rental apartment houses and replaced them with $30,000 and $40,000 town houses. A great improvement, for those poor with $30,000. And this is the rule, not the exception, as was shown years ago by Martin Anderson in The Federal Bulldozer

I don’t know much about urban renewal programs or whether they purport to help the poor; anyone want to weigh in here?

Most conservatives now seem to have accepted, even embraced, the space program and with it the idea that the exploration of space can only be achieved by government. That idea is false. If we had not been in such a hurry, we not only could have landed a man on the moon, we could have done it at a profit.

How? Perhaps as a television spectacular. The moon landing alone had an audience of 400 million. If pay TV were legal, that huge audience could have been charged several billion dollars for the series of shows leading up to, including, and following the landing. If the average viewer watched, altogether, twenty hours of Apollo programs, that would be about 25 cents an hour for the greatest show off earth…

A greedy capitalist could have sold the moon landing in 1969 for something over $5 billion. The government spent $24 billion to get to the moon. It costs any government at least twice as much to do anything as it costs anyone else. It would have cost something under $12 billion to produce the Apollo program privately.

But Apollo was a crash program. If we had been in less of a hurry, it would have cost far less. While we were waiting, economic growth would increase the price for which the moon landing could be sold and technological progress would cut the cost of getting there. We would have arrived, at a profit, sometime in the seventies.

This is the business model of Mars One, which may be a scam. Which makes me wonder: how come, if the business model is sound, in 25 years of us having approximately the technology necessary to go to Mars, no one has come up with a non-scam version of this?

The NFL makes $10 billion a year through TV ads and sponsorship rights. I don’t know if a Mars mission would do better or worse than that – certainly the touchdown would be more exciting, but would people tune in month after month for “Yup, we’re still in this capsule, it’s really cramped in here and outside the window it just looks black”?

Robert Zubrin says he thinks a private company could reach Mars for $5 billion, which sounds promising, but he gets that because the government estimate is $50 billion and he thinks private companies can be ten times more efficient. Come on, Robert Zubrin! Even David Friedman estimates more like twice as efficient. I also note that SpaceX is estimating $1 billion to convert their existing Dragon to a crew-ready Dragon. $1 billion for a famously efficient private company to go from existing small rocket + small capsule to slightly improved small rocket + small capsule that can go to low Earth orbit – and you’re expecting another private company, right out of the gate, to be able to create ex nihilo a Mars-worthy spacecraft and the rocket that can launch it for $5 billion? Plus the astronaut training program, the production of the TV specials, the overhead for this new giant aerospace company you’re founding, the cost of the colony itself, etc, etc? Really?

And even if it’s possible in theory, think about the risk. The risk that the spacecraft explodes on the launch pad, and either you’ve just stuck your company name on a national tragedy or else you’d invested $6 billion in a TV special that’s never going to happen. Or the risk that five years later, the Mars One people come to you and say “Okay, Robert Zubrin was way too optimistic, we spent all your money to build the spacecraft’s left navigational fin, can you give us some more?” The risk that the Chinese beat you there and televising the second manned Mars landing isn’t very exciting.

Nothing I’ve seen so far convinces me that a serious version of Mars One is anywhere on the horizon. SpaceX will probably send a man to Mars someday, but they’ll do it because Elon Musk is vision-driven instead of profit-driven and he’s making enough profits somewhere else to fund his vision. And I don’t think even that would have worked without the funding and help that NASA has given SpaceX so far.

I worry that very big high-risk projects are exactly the sort of thing our current market system is really bad at.

My own conclusion—that drug companies should be free to sell, and their customers to buy, anything, subject to liability for damages caused by misrepresentation—must seem monstrous to many people. Certainly it means accepting the near certainty of a few people a year dying from unexpected side effects of new drugs.

This probably needs its own post, but no no no no no no no no, regulating drugs by liability is not a good idea, maybe even a worse idea than regulating them with regulations. Just as a quick example, here is an excerpt from Wikipedia’s article on the National Vaccine Injury Compensation Program:

“In 1988, the National Vaccine Injury Compensation Program (VICP) went into effect to compensate individuals and families of individuals who have been injured by covered childhood vaccines.[5] The VICP was adopted in response to an earlier scare over the pertussis portion of the DPT vaccine. These claims were later generally discredited, but some U.S. lawsuits against vaccine makers won substantial awards; most makers ceased production, and the last remaining major manufacturer threatened to do so. “

In other words, people kept winning so much money by suing the makers of pertussis vaccines that all of them except one just gave up and went out of business, and the only way the government saved that last one was by promising that the public purse would pay all of its losses. If the government hadn’t stepped in, we would not have vaccines right now because lawsuits would have made it unprofitable to make them. Idiotic lawsuits, I might add – pertussis vaccine doesn’t actually hurt people in any way. This is “my kid got autism after getting a vaccine” level stuff, and the courts were just like “Sure, fine, we believe you, let’s make the vaccine companies pay you so much money they all go bankrupt.”

This is not an isolated incident. The way malpractice works these days is that patients sue for things that are completely medically impossible, the malpractice insurances know that juries are too dumb to realize this, and they settle for more money than you will ever make honestly in your life. The FDA and its regulations are actually a rare force limiting this madness – if nothing else, a doctor can say “Well, that drug was approved by the FDA, so I wasn’t negligent in prescribing it to you.”

I understand that this book’s proposals include a large package of reforms which include those to the court system. But Friedman’s worries about how any “limited government” will eventually regrow into the kind of government that says you feeding your own grain to your own pigs is interstate commerce, are matched by my worries about how any “reformed court system” will eventually regrow into the kind of court system where children must be banned from sledding because if they get hurt they can sue the city for not having banned sledding, or lots of people who come to a psych hospital have to be committed lest years later somebody sue the hospital for not committing them.

If you invite more lawyers in to help control the government, you might end up like that Irish warlord who invited the English in to help control a rival warlord; you’ll find they’re even worse and they never leave.

The argument of this chapter received striking support in 1981, when the FDA published a press release confessing to mass murder. That was not, of course, the way in which the release was worded; it was simply an announcement that the FDA had approved the use of timolol, a ß-blocker, to prevent recurrences of heart attacks. At the time timolol was approved, ß-blockers had been widely used outside the U.S. for over ten years. It was estimated that the use of timolol would save from seven thousand to ten thousand lives a year in the U.S. So the FDA, by forbidding the use of ß-blockers before l981, was responsible for something close to a hundred thousand unnecessary deaths.

If examples of times when bad FDA decisions cost tens of thousands of lives made people abolish the FDA, we would probably have like negative seventeen FDAs by now.

Special interest politics is a simple game. A hundred people sit in a circle, each with his pocket full of pennies. A politician walks around the outside of the circle, taking a penny from each person. No one minds; who cares about a penny? When he has gotten all the way around the circle, the politician throws fifty cents down in front of one person, who is overjoyed at the unexpected windfall. The process is repeated, ending with a different person. After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.

Annnnd we’re back to me just highlighting passages for rhetorical brilliance.

How much would it cost workers to purchase their firms? The total value of the shares of all stocks listed on the New York Stock Exchange in 1965 was $537 billion. The total wages and salaries of all private employees that year was $288.5 billion. State and federal income taxes totalled $75.2 billion. If the workers had chosen to live at the consumption standard of hippies, saving half their after-tax incomes, they could have gotten a majority share in every firm in two and a half years and bought the capitalists out, lock, stock, and barrel, in five. That is a substantial cost, but surely it is cheaper than organizing a revolution. Also less of a gamble. And, unlike a revolution, it does not have to be done all at once. The employees of one firm can buy it this decade, then use their profits to help fellow workers buy theirs later.

When you buy stock, you pay not only for the capital assets of the firm—buildings, machines, inventory, and the like —but also for its experience, reputation, and organization. If workers really can run firms better, these are unnecessary; all they need are the physical assets. Those assets—the net working capital of all corporations in the United States in 1965—totalled $171.7 billion. The workers could buy that much and go into business for themselves with 14 months’ worth of savings.

Compare to A Future For Socialism. In the research for that post I believe I found that the ratio of capital assets to wages had been rising pretty sharply recently, so it might take more time these days. But even if it took an entire decade, that’s a lot faster than most Communists expect the Revolution to come.

It probably says something very important about human nature and politics that the Socialist movement isn’t dominated by the project of doing exactly this.

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301 Responses to List Of Passages I Highlighted In My Copy Of “Machinery Of Freedom”

  1. Samuel Skinner says:

    “Continuing to have nothing much to say except “wow”.”

    Why do you think that people talk about how good the food (and how pretty the stewardess) were in the old days? That was the only metric companies could compete against each other so they had really good in flight service.

    “This is the business model of Mars One, which may be a scam. Which makes me wonder: how come, if the business model is sound, in 25 years of us having approximately the technology necessary to go to Mars, no one has come up with a non-scam version of this?”

    Aside from the issues you note, it isn’t enough for an endeavor to be profitable; it has to be more profitable than other things you could spend money on. Space travel is nowhere near that yet; maybe with a billion Indians and a billion Chinese you’d get enough spectators, but piracy makes this a rather massive free riding issue.

    • Richard says:

      Stewardesses haven’t changed much.

      I have flown with the same airline on the same leg fairly regularly for close to three decades and it’s the exact same stewardesses.

      🙂

      • Zach Pruckowski says:

        From the perspective of an irregular traveller on the same flight as you, the stewardesses gotten older and (presumably in their opinion) less attractive. If they don’t travel enough to realize that it’s the same crew, they’ll just remember having had young stewardesses a few decades ago and middle-aged stewardesses on their most recent flight.

    • RCF says:

      “Aside from the issues you note, it isn’t enough for an endeavor to be profitable; it has to be more profitable than other things you could spend money on.”

      Being more profitable than other things is what being profitable means.

      • Matthew says:

        Economics generally draws a distinction between “accounting profit” and “economic profit.” The latter being the thing that’s not supposed to happen in ideal world of perfect information and perfectly competitive markets. Nevertheless, even in our not-frictionless actual market, there are plenty of firms that make accounting profits, but not much economic profit.

  2. “that Irish warlord who invited the English in to help control a rival warlord; you’ll find they’re even worse and they never leave.”

    Dermot of Leinster? Invited Richard Strongbow, Earl of Pembroke, in to help him against his subjects, married his daughter to the Earl. Their daughter and heiress (no sons) married William Marshall, one of my favorite medieval characters, who ended up ruler of a fair chunk of Ireland, Pembroke, and lots of odds and ends in Normandy. Not bad for the fourth son of a minor baron. Also ended up fighting an undeclared war in Ireland with his liege lord, King John. Successfully.

    But I wouldn’t describe an Irish king as a warlord, so perhaps you are thinking of someone else.

    • Noah Siegel says:

      Seriously, you wanted to throw the gauntlet down to David Friedman, and the turf you chose was medieval Europe metaphors? HOW COULD THAT POSSIBLY SEEM LIKE A GOOD IDEA?

    • Deiseach says:

      Mr Friedman, it may have worked out nicely for Strongbow, but for the rest of us – we call it The Eight Hundred Years. The folklore in my city is that at the marriage of Strongbow and Aoife (daughter of Diarmuid Mac Murchada), the streets ran red with blood 🙂

      Also, Diarmuid lied (or at least misled) Strongbow about his succession rights to the kingdom of Leinster; sure, for the Anglo-Normans who practiced primogeniture, marrying the heiress would give him a very strong claim, but under the Irish Brehon law and tanistry systems, all the male members of the derbfine had succession rights, and Aoife’s husband had no greater rights in law than they did.

      Actually, this is very pertinent to our discussion of private protection agencies and arbitration! Diarmuid was a law-breaker (by Irish law, defying the judgement of his lawful superior the High King who dispossessed him of his kingdom as punishment for his crimes; the casus belli was his abduction of the wife of the King of Breifne) who then went abroad to bring in a rival protection agency to recover by force.

      This then gave us three protection agencies: the High King and his allies, Diarmuid and his supporters, and the Anglo-Norman mercenaries (acting, at least technically, in the name of Henry II). While the Irish managed to come to an agreement, the Normans did not; the lure of lands for, as you point out, younger sons and minor nobles was too great. They stayed and started waging wars of conquest offering their services to potential customers to replace their current protection agencies, throwing in as a free bonus the replacement of local law by their new, improved, best practice as used on the Continent, model.

      This went to arbitration – the appeal to the only English pope, Adrian IV, who issued the bull Laudabiliter in favour of Henry II – since both the native Irish and the Anglo-Normans were Catholic, the pope was recognised as having authority by both sides. This resulted not in it being too expensive for two protection agencies to go to war, but in – well, the Eight Hundred Years 🙂

      I’ve had occasion before to quote this anecdote, about the attitudes of the native Irish to our new insect overlords the alternate protection agency providers, from the Topographica Hibernica of Giraldus Cambrensis, the Welsh-Norman chronicler of the Norman conquest in Ireland, who had family members in the armies of the invading knights:

      Chapter XXXII: A sarcastic reply of the Archbishop of Cashel

      I once made objections of this kind to Maurice, archbishop of Cashel, a discreet and learned man, in the presence of Gerald, a clerk of the Roman church who formerly came as legate into those parts; and throwing the blame of the enormous delinquencies of this country principally on the prelates, I drew a powerful example from the fact that no one in that kingdom had ever obtained the crown of martyrdom for the church of God. Upon this the archbishop replied sarcastically, avoiding the point of my proposition, and answering it by a home-thrust: “It is true,” he said, “that although our nation may seem barbarous, uncivilized and cruel, they have always shewn great honour and reverence to ecclesiastics, and never on any occasion raised their hands against God’s saints. But there is now come into our land a people who know how to make martyrs, and have frequently done it. Henceforth Ireland will have its martyrs, as well as other countries.”

      Given that Anarchistic Capitalism relies so heavily on the rule of law as a replacement for government, and that competing bodies will agree to arbitration, accept the decision of the arbitrator and stick to carrying out those decisions, Diarmuid and his Norman usurpers don’t seem like very good exemplars to hold up as role models!

      – Ignored the decisions of local law
      – Used force to impose themselves on territories that had not invited them in
      – Broke agreements with their allies to advance their own self-interest
      – Two (or more) competing law systems which no party recognised one as having priority over the other
      – First local arbitration accepted by two of the three parties, but third party ignored it and continued use of force
      – Outside arbitration agency presumed to be biased, or influenced to be so, in favour of one party
      – Decision of arbitrator ignored and wars continuing to be waged at sporadic intervals for eight hundred years or so
      – Authority and property rights of original party who invited in new protection agency usurped by that protection agency

      • “The folklore in my city is that at the marriage of Strongbow and Aoife (daughter of Diarmuid Mac Murchada), the streets ran red with blood”

        Do you have a source for that vivid image earlier than a painting produced some seven hundred years after the events in question?

        “Diarmuid was a law-breaker (by Irish law, defying the judgement of his lawful superior the High King who dispossessed him of his kingdom as punishment for his crimes; the casus belli was his abduction of the wife of the King of Breifne)”

        Or possibly his support for a rival claimant to the position of High King? Our knowledge of traditional Irish law is less clear than one would wish, since the earliest surviving texts date from about two hundred years after the events in question and the earlier materials they contain are fragmentary, internally inconsistent, and inconsistent with non-legal sources on the (much earlier) system they describe. Is it clear that the high king, insofar as the position existed, had the legal authority to dispossess provincial kings? In the case of Rory O’Connor it seems to have been mostly a matter of warfare not recognized legal right.

        “This went to arbitration – the appeal to the only English pope, Adrian IV, who issued the bull Laudabiliter in favour of Henry II”

        Assuming the authenticity of Laudabiliter, a somewhat controversial subject as I expect you know, it was issued some fourteen years before Strongbow’s alliance with Dermot, hence was not an arbitration of the conflict between those allies and their opponents. By the time of the events you are describing, Adrian had been dead for more than a decade.

        “This then gave us three protection agencies: the High King and his allies, Diarmuid and his supporters, and the Anglo-Norman mercenaries (acting, at least technically, in the name of Henry II).”

        Your central argument seems to assume that all political structures are the same, hence that the behavior of any organization engaged in (among other things) rights enforcement is clear evidence of how any other organization providing that service would act. Dermot was, or claimed to be, king of Leinster, a territorial sovereign, not a private rights enforcement agency. Similarly for Henry II, Tiernan (king of Breifne) and his ally Rory O’Connor, king of Connacht and High King. In Machinery I discuss at some length the difference between the incentives implied by the different institutions.

        “Given that Anarchistic Capitalism relies so heavily on the rule of law as a replacement for government, and that competing bodies will agree to arbitration, accept the decision of the arbitrator and stick to carrying out those decisions, Diarmuid and his Norman usurpers don’t seem like very good exemplars to hold up as role models!”

        As you can easily check by reading the comment you are responding to, I did not hold up any of those in question as role models, although I did make a positive comment about Strongbow’s post mortem son in law.

      • ad says:

        Surely all this just demonstrates what a great deal this was for Dermot?

        Strongbow agreed to help him get things he claimed, in exchange for a chance to give his daughter and grandchildren things they did not have a claim to!

        That must be one of the greatest deals of all time.

      • Deiseach says:

        MacLise’s painting is based on the folklore, not vice versa.

        I also have some hot gossip about Cromwell from my town’s traditions of his visit to us on the South-Eastern leg of his Try Our New Protection Company promotion tour – Special Introductory Offer, Sign Up Now And Keep Breathing.

        I don’t necessarily believe the story that his soldiers beat a man to death with his own wooden leg, so I hope you can see that I don’t take everything as gospel 🙂

    • Susebron says:

      Maybe he meant Vortigern? He wasn’t Irish, but it’s a similar situation. He invited the Saxons, etc. in to deal with Pictish raids, and ended up getting invaded.

  3. Sniffnoy says:

    Regarding jitney transit, I believe some countries or cities already do something like this with their bus systems — there are defined routes, but the buses are privately owned and operated. I can’t find right now what I was thinking of — I was thinking of somewhere in central America — but according to Wikipedia this is true of the UK! This might not be exactly the same system as what I was thinking of though, I don’t really understand the details.

    • The Smoke says:

      I have seen it in Albania. People just stand next to the road and sometimes a little van comes by and picks them up. It’s pretty much the only public transportation system they have, and I think there are versions of this in other Eastern-European Countries (also somewhere in Mexico, according to a math talk about universality). The bus drivers do it for a living, though.

      Also in Germany there is a webpage where you can post middle- to long- distance drives, and other people can message you to take them with you for a small compensation. This worked pretty well, though recently long distance bus travel has become more popular.

      I imagine that the Problem with a system as described in the post would be that most people wouldn’t bother with the effort to pick up and deliver passengers when they are on their way somewhere. There is still a certain amount of (mainly mental) effort involved, e.g. clarifying the destinations, so there would probably only be drivers left who intend to make a living from it, which is exactly the system that already exists at some places. (Though you could ask why not at more)

      • jaimeastorga2000 says:

        I was born in Lima, Peru. While there are some official and regulated public transports, the vast majority of public transportation is provided by individual people utilizing private vehicles.

        If you have a car, literally all you have to do is buy a big sticker that says “TAXI” and put it into your windshield, and then you drive around main streets looking for guys standing on the edge of the sidewalk obviously waiting for a taxi. If the guy is interested, he’ll usually step up and extend his arm as you approach. You stop the car, he tells you where he want to go, you say a price, and if he agrees he gets on and pays you near the end of the ride. Motorized rickshaws are similar, except they tend to patrol smaller, less busy streets, and go shorter distances.

        Buses work a little differently. A private microbus requires a two-man crew; a driver and a collector. The driver drives around a preset route of main streets, and the collector sits (or, more often, stands) at the door and yells out the names of the streets the bus goes to, as well as the price he charges, and per ancient tradition always points out that there is “room at the back” no matter how full his microbus is. He also collects money from people before they get off. Microbuses do not leave their main street routes, so you’ll usually have to walk a few blocks to get to your destination after you leave one, but blocks are small in Lima so it’s fine. They put stickers of the streets they go to on their windshields, or sometimes paint them on the vehicle frame.

        This completely decentralized system is absolutely amazing in its reliability and affordability. You can’t stand in a main street in Lima without seeing several microbuses and taxis drive by per minute. You probably won’t have to wait more than 5 minutes to see either an empty taxi or a microbus which goes to the street you need to go. Compare to American mass transit systems, where taxis cost a fortune if you can even find one, and buses come to the bus stop on a hourly basis if you are lucky. Living without a car is a perfectly viable choice in Lima, whereas in America it is something you only do if you are absolutely forced to.

        • HeelBearCub says:

          At 8M people, Lima is huge. At 3300 per sq. km it’s also fairly dense.

          Compare that to Atlanta, which has a density in its metro area of 250 per sq. km.

          I’m predisposed to believe a jitney system will not work in any are that has a relatively low density.

          • nydwracu says:

            It would work for commuters, but not much else.

            Say I live in West Laurel (which, thankfully, I don’t) and work in DC. A lot of people do. So I can take a jitney to DC in the morning and a jitney back at night. If I wanted to do that on public transit, I’d have to take two buses, and metrobuses are awful and never come on time. If I lived further out in Laurel, I’d probably have to take a Laurel bus to get to the metrobus to (I’m guessing) Burtonsville to get to the metrobus to DC, and Laurel buses are… the one time I had to take one, half the seats on the thing had been ripped out and it was blasting music so badly clipped that I couldn’t even tell what it was. So a jitney system would be very preferable to public transit.

            If I lived in West Laurel and I wanted to go to the Trader Joe’s close to Silver Spring, I could get there in the morning, but I’d probably be stranded at a strip mall in the middle of nowhere for most of the day. So I’d have to wait until the weekend.

            But this sounds like carpooling, which already works for getting to/from jobs, doesn’t it?

          • HeelBearCub says:

            It would work for commuters, but not much else.

            I’m not sure it would even work there. You have to have enough density on both ends of the trip. DC isn’t a very dense living area (for a variety of reasons) even though the vast bulk of the jobs are fairly densely packed inside DC proper.

            How willing are to pick up a stranger for a small economic transaction (where the fee is negotiable!) on your way to work? In order for that to be a functioning economy, there have to be enough people to get this to be a reliable way to make money and a reliable way to get to work. Density only on one end needs some sort of concentrator (which is why you see metro-rail working fairly well).

            But I’m not going to queue up to pick someone up at a jitney concentrator for $5 bucks a day. And the reverse concentration problem is REALLY big. How do these people get a reliable ride home?

          • Devilbunny says:

            One might argue that it already works for commuters in northern Virginia – the slug lines. Doesn’t cover end-to-end trips, but is still a remarkable system for getting commuters in and out of town efficiently. And the only currency is the time saved by all by being able to use HOV lanes.

        • Unaussprechlichen says:

          In Russia, a system of privately owned minibuses (marshrutkas) nearly displaced public buses. Those still exist, but don’t cover all the routes that marshrutkas do, and don’t arrive as often.

          And this system works, that is, you can get from point A to point B, but marshrutkas are notoriously unsafe and uncomfortable. A public bus or trolley, if available, is always a preferred option.

          • Cauê says:

            São Paulo saw something very similar about 15 years ago.

            I remember it being a huge improvement in wait times, but it was regulated away, for “safety”.

      • Anthony says:

        We have something like this in the East Bay, but only for traffic to downtown San Francisco. There are a number of “casual carpool” locations where people and cars line up, with drivers waiting their turn for two additional passengers to be able to use the (much faster, and $3.50 cheaper) carpool lane on the Bay Bridge. Occasionally, one can negotiate a non-standard destination – I used to do this with a two-seat pickup truck, and once gave a ride to a woman going nearly as far south in San Francisco as I was.

        Some of the casual carpool pickups are “authorized” by the city, others less so – I’ve occasionally poached the bus stops, and I’ve seen it done by others.

        The problem is that the return doesn’t work as well. There’s a carpool-only onramp to the eastbound Bay Bridge, too, and near it there are a bunch of signs for different destinations, but AC Transit ends up taking a few thousand more passengers in the afternoon than in the morning.

        • HeelBearCub says:

          What I find interesting in your comment is the compensation given the driver for sharing their vehicle, which is essentially time (not that the $3.50 is anything to be sneezed at, but there won’t be many people running a Taxi service for $1400 a year).

          My sense is that this is precisely the thing that prevents most ride-sharing type operations from working all that well. Time is a fixed resource. No one gets more than 24 hours a day. Once you have a job, time becomes precious, especially at the low end of the economic spectrum, which tend to have jobs that are less flexible in terms of stop/start times.

    • chaosmage says:

      I don’t think that works at all, because I model public transport as protection from immobility. For a protection mechanism, I prefer an inefficient but reliable system to an efficient but ultimately unreliable one.

      Much like insurance, really: Of course I’m losing money overall, but it gives me peace of mind and an ability to plan ahead, and that’s worth it. When I need to get to a job interview, hitchhikes just don’t cut it.

      • Deiseach says:

        I’m the same way. When I’m walking to work in the rain, I see empty (but for the driver) cars passing me. It would be great if I could stand by the road and get a lift, but – (a) I can walk to work in the rain and at least know I will get there in time (b) I can stand by the roadside and hope that someone will be passing by at the right time going in the right direction willing to pick me up and drop me off, and since I don’t know if I’ll be waiting ten minutes or half an hour, I can’t guarantee I’ll get to work on time.

        Anybody who has to clock in at a certain time or else have penalties taken out of their pay packets, what do you think they’ll do? Yes, if there’s a recognised stop and a regular timetable and everyone knows “Everybody in town works for Sprockets plc so there will be cars on the main road at 7:30 a.m. so you will have a very good chance of getting a lift to work with your co-workers”, that’s fine.

        He’s going to [town X], he’s going to [city Y], and he’s heading in the opposite direction to where I want to go, all of us heading to our respective places of employment – not so much.

        Again, it’s not a bad solution, but one that works best for large urban centres with well-defined main routes and one or only a few major hubs where the employment centres are located, so that everyone is going out to the industrial estate or call centre or shopping mall for their jobs and everyone is heading in the same direction at the same time every day.

        • houseboatonstyx says:

          Traditionally, US hitchhikers write their destination on a cardboard sign. You could wear one on your back and keep walking. The large employers could issue these signs to their employees, with the necessary time of arrival included.

          (Or, the timeclock workers could take the regular bus, and the executives could take Uber.)

      • Tracy W says:

        For a protection mechanism, I prefer an inefficient but reliable system to an efficient but ultimately unreliable one.

        Public transport systems in your neck of the woods never stop because the workers went on strike, or the weather was lousy, or something broke, or the traffic jammed?

        I’ve caught public transport most of my life, I’m currently living in London commuting on a tube line that’s entirely underline, ruling out the weather problems, and yet the public transport system is still unreliable. Like any other transport system I know of. (How about the time someone opened a car door directly in front of my bicycle?)

        • chaosmage says:

          I use public transport nearly every day, and I recall two problems in the last ten years. (Once a train was very late due to a fire, one other time there was a strike.) I’m confident nearly any car owner has had more problems than I did, and from my experience with what passes for public transport in the UK, I’m not surprised you have too.

          Some countries have excellent public transport (Switzerland, Germany, Austria, Belgium, to name just those I’ve seen). So it can be done.

    • I don’t the UK system is much like what DF had in mind, it was largely a privatisation of existing services, that changed little in look and feel. One of the upshots was that the privatised companies became unwilling to run unprofitable but socially useful rural routes, and had to .be bribed into doing so.

      The main rival to the former public companies US stagcoach, run by Brian “controversial” Souter.

      “His tactics included operating buses just before and just after a rival service and at a cut price. In Darlington, he even flooded the place with free buses, successfully driving his rival out of town. ”

      Looks like in of those things that never happens, happenned.

    • Zach Pruckowski says:

      In DC and Arlington, VA, there is a phenomenon called slugging whereby commuters pick up random riders at Park-and-Rides heading in their same direction. They do this because Route 66 is HOV-3, so picking up two random strangers to carpool with allows them to use a lower-traffic, more direct route into the city. I don’t know that much about it because I take a bus, but it seems very similar to the “jitney” mentioned here.

  4. Nathan says:

    The carpool versions of Lyft and Uber provide a good framework for jitney transit. I know that at least Lyft has a version of Lyft Line where the driver can enter their own destination. The remaining hurdle seems to be getting commuters to go through the necessary sign-up process, since those processes are currently optimized for people doing it a lot more often than twice a day.

    On the issue of regulating drugs by liability, I think he meant something a lot less terrible than what you took away from it. He specifies liability for misrepresentation only, which I interpret to mean things like “the company said this was melatonin but it was actually prednisone”.

    • Jack O'Connor says:

      That was my impression too. I think the idea was that drug companies would be liable if they lied, but if they just released a drug and said “here we have no idea what this does,” that would be legal. Not sure what the consequences would be exactly, but I don’t think the idea was to have a lot of lawsuits.

    • Julie K says:

      We don’t necessarily have to get rid of the FDA, just make it optional, so that a company could choose to release its drugs either with or without FDA approval.

    • Kyle Strand says:

      Yes. That. Scott’s example cases are not examples of “misrepresentation.”

  5. I’m quite willing to believe that the FDA kills people by being overly cautious, but citing just one example of this, without putting it into context of how often this happens vs. how often people get killed by the FDA not regulating something, smacks of hindsight bias.

    Perhaps there are numbers in the book? Of course they’d be from 1973.

    • Richard says:

      Ben Goldacres bad pharma goes through this in some detail with rather a lot of numbers.

      Btw:
      Does someone know how to link to amazon on here and get the affiliate link rather than a generic one?

      • RCF says:

        I would assume that if you follow the affiliate link and navigate to the book through that link, the resulting URL would be through the affiliate link.

    • The beta blocker example is a note added in the second edition in support of the chapter’s argument for why one would expect the FDA to over regulate. The chapter mentions the obvious argument in favor of regulation but does not claim to offer data on the relative size of costs and benefits.

      For people who would like to base their criticisms on something more than the snippets quoted or summarized here, the second edition is available as a free pdf at:

      http://www.daviddfriedman.com/The_Machinery_of_Freedom_.pdf

    • Squirrel of Doom says:

      I often miss such a site. Maybe it is hard to measure this in any objective way. But it would be a really useful resource on this here internet!

  6. dlr says:

    …love, trade, and force.” He left out fraud.

    • A Jealous Monk says:

      Fraud and force can get lumped together in the sense that fraud is still taking something by force, you’re just using your wits as the instrument of force instead of a gun. I don’t think fraud would need to be its own category alongside love, trade, and force; all the same things that would be said about force would apply to fraud.

      • Mengsk says:

        I don’t think that fraud in necessarily comparable to force, since it could refer to any collaborative arrangement which is only possible because there is an imbalance of information.

        We all know that there can be fraudulent trade (e.g. a car salesmen sells me a car that he knows to be defective and I do not). But consider that there can also be fraudulent force– a bluff (e.g. if someone frightens me into compliance with an empty threat) and fraudulent love (if somebody, through charisma and/or rhetoric, convinces me our interests are aligned, when he knows that they are not).

        I think the Libertarian “solution” is that, in states of uncertainty, people are strongly motivated to purchase the services of journalists, industry experts, accreditation boards, and regulatory/review bodies who can reduce information imbalances.

        I personally think that this picture is overly cheerful, as it underestimates the cognitive costs associated with acquiring information, even when you do have high demand for honest, credulous reporting on consumer goods. This is in part because it pushes back the problem to the credulity of the reviewers. I think that “information goods” is actually an area monopoly has some advantages, since it means that consumers do not have to track the reputations and credulity of dozens, if not hundreds of organizations (which, frankly, nobody has the cognitive resources to do)– they only have to track the reputation and credulity of one.

        This is, indeed, why I think handing over regulatory powers to government is a decent idea, because it changes the consumer’s task from “be knowledgeable about dozens of organization in order to make an informed decision” to “be knowledgeable about one institution, and know the mechanics by which you and your fellow citizens can affect change that organization if necessary”.

        • Julie K says:

          The internet has made this a lot easier; you can get customer reviews for any product or service under the sun, and even reviews for rating organizations.

          • cypher says:

            Yeah, except any company can also purchase fake reviews, and some already do.

          • Harald K says:

            Yeah, they only cost pennies too.

            Oh, you meant the buyer could get them?

            (Sorry for the snark, but I dug through pages of someone selling fake reviews on Amazon lately, and I’m feeling a little on the misanthropic side after seeing what they were pushing)

        • You are missing the striking disadvantage of “handing over regulatory powers to government.” Information used to make private decisions is a private good, so the individual has a substantial incentive to obtain it. Information used to “know the mechanics by which you and your fellow citizens can affect change that organization if necessary” is a public good with a public of 300 million people, so almost nobody has any significant incentive to obtain accurate information on that subject. Public goods are underproduced, and the problem is an increasing function of the size of the public.

          This is a point that a lot of people miss. There are indeed forms of market failure that make the private market work imperfectly. But what is a special case on the private market is the norm on the political market, since actors on that market almost never receive a significant fraction of the benefit, or pay a significant fraction of the cost, of their acts, hence have little or no incentive to choose those acts that produce the greatest net benefit and avoid those that produce net costs.

          • CThomas says:

            To me, this is one of the most critical points of Dr. Friedman’ arguments, and it is under-discussed here. He is surely correct that it is insufficient to point to bad outcomes under his proposed form of (non-)governance without comparing it against the badness of outcomes under the status quo ante, and this argument about the expected prevalence of market failures in the political market strikes me as really important and worthy of close examination. I can’t embrace Dr. Friedman’ rather extreme ideas, but I would feel a lot better about it if I had a good theoretical answer to this particular point.

        • Tracy W says:

          Problem with government is that I’m dependent on the knowledge of all my fellow citizens. Who mostly are rationally ignorant. Eg they favour more government spending on everything except foreign aid, lower taxes and no deficit, a set of options which are not simultaneously achievable. (This probably means that I’m equally as stupid in some of the things I want government to do and not do.)

    • MWolf says:

      I don’t think anybody is seriously advocating fraud as a legitimate means of making other people do what you want them to do. But people do quite often advocate making others do their bidding through force, although they may not always realise/admit that that’s what they’re doing.

      • JB says:

        Not as a legitimate means, but one that has to be taken into account. If one’s thought process is “Love and Trade are both good things, so let’s just eliminate Force as much as possible, and then human relations will be much more happy and voluntary”, then forgetting about the existence of other means than just those three is a major oversight.

  7. Intrism says:

    I call it jitney transit

    This has existed for a very, very long time. Though he claims it to be different, this is really just hitchhiking with minor monetary rewards. Its decline is already very well-documented. (For one reason why this happened, see your review of Kerouac’s On the Road.) In the American urban mass transit niche specifically, this exists as “slugging” or “slug lines.” The practice is moderately successful in some urban areas, especially those with stringent regulation, which encourages it. And, of course, it is always free, which does seem likely to make this particular author sad.

    • A Jealous Monk says:

      “And, of course, it is always free, which does seem likely to make this particular author sad.”

      I don’t see why. A community system of providing rides to other people for free falls somewhere between love (to the extent that having available transport is a common end of all the participants) and trade (to the extent that you expect reciprocity when you need a ride), so it seems to me like exactly the sort of thing he would approve of. I really don’t like the mentality (which I observe in your remark, and I apologize if I’ve misinterpreted) that libertarians like money for it’s own sake and think it needs to be involved in every transaction. It always seems like an unfair and somewhat self-serving mis-characterization that casts libertarians as opposing perfectly workable, non-governmental solutions to problems just because no profit is involved.

      • I don’t see why either.

        The second edition of Machinery is up on my web site as a free pdf. So are both of the books my wife and I published on our medieval hobbies.

        Going in the other direction, the cover of the current edition was produced via a contest I set up on my blog–this afternoon I mailed a box of books, a signed copy of every book I have published, to the artist. The cover of my second novel didn’t even cost me that much. The novel is Salamander, the title is a reference to the fire elemental (it’s a fantasy), so I searched the web for a good picture of the Salamander. The one I found was a quilt. I asked the maker for permission to use it as the cover for the Kindle (you didn’t know Kindles needed covers?), and she agreed, conditional on my crediting her, which I did.

        The SCA has an annual event called the Pennsic War. At the average Pennsic I teach ten to fifteen classes. I don’t charge for them.

        I also run a bardic circle in the evening. If someone does something that really impresses me, the payment is a silver arm ring, Norse style, of my making. I like to refer to them as bard bait.

        There is nothing in the least inconsistent between either economics or libertarianism and a gift economy. It’s just one of the many ways in which individuals can, and sometimes do, choose to interact.

      • JM says:

        It’s free because the goal is usually too be able to take the HOV lane without paying a toll. It only works for really popular destinations like the pentagon, though.

      • Intrism says:

        The line is perhaps poorly-phrased. The bigger issue I suspect the author might have with the system is that it’s the result of strict HOV regulations operating exactly as intended. It being free looks more like a wrong prediction than a source of actual offense, although it has (apparently) prevented wider market-driven behavior from springing up around the topic.

        • Doctor Mist says:

          I don’t see this point either. If you think theory predicts that the driver would not offer rides without getting something out of it, well, he does. If things were set up so that he did not get the HOV advantages, you might expect that he would insist on more direct compensation, and maybe he would. But in fact it’s usually false and (even when true) an irrelevant digression to damn libertarian or anarcho-capitalist thought as stemming from a conviction that nobody does anything for free.

    • lmm says:

      It’s not always free. See e.g. Chinatown minibuses.

  8. Mr. Eldritch says:

    I actually know somebody who’s involved in the current commercial-space enterprise; In the morning I’ll ask them for a good explanation of why we hadn’t already done a private space program if it would be profitable. I think risk and the lack of a proven market is *part* of it, but I don’t think that’s the whole thing.

    • John Schilling says:

      It’s more the combination of market risk, technical risk, and regulatory risk. Bankers and institutional investors will provide gigabucks for ventures which face any one of these – see e.g. Federal Express and the cruise ship industry, which spent billions of dollars to use existing technology in unambiguously legal ways to serve completely unproven markets. All three at once, and the money goes to look for some other venture that’s only got one major risk item.

      FAA-AST has been doing surprisingly good work in bringing down the regulatory risk, and companies like SpaceX are reducing the perceived technical risk, but those are fairly recent developments.

    • roystgnr says:

      If risk isn’t the whole thing, it’s certainly a large enough part of the thing that any remainder of the thing can hide in risk’s pockets. SpaceX is having great success at the moment, but a priori investors can’t easily tell if their private launch company is going to be a SpaceX or if it’s going to be a Kistler, a Rotary Rocket, Beal, etc.

  9. Markus Ramikin says:

    > Continuing to have nothing much to say except “wow”.

    If that was new to you, I take it you haven’t read Free to Choose? (Would love to hear your thoughts on that one.)

  10. Charlie says:

    But for a complicated end involving a large number of people—producing this book, for instance—love will not work

    Tell that to Linux et al. This stems from a deeper rhetorial fallacy, which is that Friedman starts out by saying “oh, ‘love’ also covers when people have ends in common,” but then ends up saying “well, I can’t get to know and love the entire Linux community, so there’s no way that stuff could work.”

    A very interesting tangent: the conflict between market norms and social norms. In fact we might add another set of norms, “hierarchical norms,” to describe typical members of the “force” category (forcing teenagers to do public service – which is not necessarily the same norms that govern a mugging or a shootout; there is a role that the higher-ups in the hierarchy have to play in order to keep within the norms, like promoting safety and fairness to some extent. So again we could add more categories of norms).

    When Friedman says that there’s no conflict between love and trade, the conflict of norms immediately springs to mind. I might take a friend out to lunch and then pay the restaurant, but it would violate norms too much to take a friend out to lunch and then pay the friend! How much sense this makes may vary depending on whether one is an economist or a psychologist, but it is how people tend to do things. Thus market norms and social norms are inevitably competing for limited space. The anarcho-capitalist project is really about replacing hierarchical norms with market norms, and so this is a tangent and not a problem, but I like this tangent so now you’re here 🙂

    • nanume says:

      Hey now, Linux gets lots of moneys poured into it, it is certainly not a product of love alone. And on a grander scale, the major point of invention on “Open Source” (as opposed ot “Free Software”) was to make community-developed code more appealing to business investements.

      • Charlie says:

        Again, I’d like to reiterate how confusing it is to label the category “when people have ends in common” as “love.”

        Does anyone pay Red Hat to contribute to Linux? No – it does it out of self-interest, but not out of trade. It is “love,” though not love.

        Hm, on the other hand, one might label it as trade because individual programmers at contributing companies get paid. Which is reasonable, but I think largely beside the point of large scale projects working based on having ends in common.

      • nydwracu says:

        Is there any good open-source software that doesn’t have corporate backing? GIMP, maybe?

    • “I might take a friend out to lunch and then pay the restaurant, but it would violate norms too much to take a friend out to lunch and then pay the friend! How much sense this makes may vary depending on whether one is an economist or a psychologist, but it is how people tend to do things.”

      My standard example is what happens if we invite a colleague and his wife over dinner, they want to reciprocate but inviting us over isn’t convenient, so they invite us out to dinner at a restaurant. It would never occur to them to reciprocate by offering us cash instead.

      I cannot speak for psychologists, but as an economist the interesting puzzle is why this pattern of norms, hostility to money payments in the context of social interactions, exists.

      • Highly Effective People says:

        I’m not an economist but the answer seems pretty straightforward.

        If I can buy your friendship that heavily implies that when my money runs out or someone else is willing to beat my price that friendship will evaporate. And friends are the kind of people you need to be able to rely on in those situations when you’re at your weakest.

        Many of the rules on how we behave with friends symbolize or simulate kinship after all: my friends are my ‘bros,’ my parent’s friends growing up were ‘uncle X’ or ‘aunt Y,’ etc. And people who would betray their families for money are the lowest of the low.

        Now neither kinship or friendship are foolproof safeguards against betrayal naturally but they supplement and complement alliances built on more mercenary ends. It makes sense why people would prefer to rely on additional bonds beyond mutual self-interest in their dealings.

    • “Tell that to Linux”, you say. Heh…I wrote the analysis which first described and later guided that collaboration, and I’m an anarcho-capitalist whose politics can barely be distinguished from David Friedman’s with a micrometer. (We are also personal friends, and I am utterly unsurprised that he and Scott are now likewise.)

      Most forms of crowdsourcing fail because of a particular, still under-studied, kind of coordination problem. Even when large groups motivated by love want to pull in a common direction, it is often quite difficult for an individual in such a group to know whether or not he she is pulling in a direction that is a net positive for the effort, and difficult to know how to correct towards contributing for efficiently.

      A consequence of this difficulty is that a steadily increasing portion of the crowd’s capabilities get diverted into monkey politics as different theories about “the right direction” turn into in-group power competitions. Usually either the crowd breaks up or love is partially – or entirely- displaced by a power hierarchy of some sort.

      Open-source software projects are almost uniquely effective at settting up interlocked hierarchies of goals for which there are objectively measurable success conditions. The program must compile; it must correctly operare with other programs using specified constraints or protocols – etc.

      The effect of these objective measures is to mostly – though not entirely – suppress the monkey politics that normally either disrupt large collaborations or drive them to power hierarchy. The community norms that code trumps politics and successful performance trumps every other form of status-seeking are not byproducts of the process, they’re its essence.

      There are many other relevant factors – I wrote a book about this for good reason – but this should suffice to illustrate why Linux is an argument in favor of the anarcho-libertarian prescription, not against it. It tells us the way – or at least a way – in which collaboration by love can scale up, and by doing so illuminates why such attempts usually fail.

      • Cryptonomicon says:

        You seem to be arguing in favor of dictatorship as a model of good governance. You describe “monkey politics” as being bad for the project because everyone wants choose the course for the project (anarcho-capitalism here? or just democracy?).

        On the other hand, the reason you point for the success of open source projects is that there is a set of well defined constraints that dictate the course of the project and take decisions away from the community members:

        Open-source software projects are almost uniquely effective at setting up interlocked hierarchies of goals for which there are objectively measurable success conditions. The program must compile; it must correctly operate with other programs using specified constraints or protocols – etc.

        This is similar to the effect of having a dictator dictating the constraints to suppress the monkey politics (think Guido van Rossum, the dictator for life). It probably works, but reduces most programmers to actual “code monkeys” under the direction of the enlightened dictator.

        This is probably why the cathedral will be always be taller and more impressive than the bazaar. That said, working in the bazaar seems to be much more fun. It’s a shame the king will come after us to collect the taxes to build the cathedral…

        • Benevolent dictatorship is indeed a viable way to organize small-scale open-source cooperation, and you are right to cite Python as an example. It doesn’t scale up to larger groups, though, and we have the sense and ihistorical experience not to try that.

          However, I thiink you are more fundamentally wrong in equating the direction provided by objective measures of correctness to dictatorship. Structural engineers have to pay attention to the breaking strain of load-bearing components, too, but we do not think of this truth as wearing jackboots.

          As for “the cathedral will be always be taller and more impressive than the bazaar”, that’s not how reality looks nowadays. Closed source is shrinking and largely stagnant corner hemmed in by open-source projects like Android with deployment numbers in the multiple billions. Even some of my personal projects – giflib, GPSD – have a reach no proprietary-software magnate could plausibly dream of.

          • Cryptonomicon says:

            Of course structural constraints are not exactly the same as dictatorship. I was just highlighting the fact that external constraints might be good for development (as you said in your comment), even if they come from a dictator. That said, I hate dictators with a passion, and can’t see myself advocating for any kind of political dictatorship.

            I’m an outsider to “real” software development (even though I have published some open software code of my own), and it shows from my comment. Surely Android is a huge success story and probably an example of open source done right and I wasn’t even aware of giflib or GPSD. The bazaar looks quite impressive after all.

            I also had no idea that closed source software in general was in the process of shrinking, given the continuing prevalence of Windows and OSX in desktop computers and tablets and all web apps we use everyday (at least in my country, your reality might be different). Your opinion as someone inside real software development is invaluable for us outsiders. Thank you for taking the time to correct me on this!

  11. noname says:

    Is it Friedman who invented the gun methafor? I really hate it.

    • MWolf says:

      How is it a metaphor? What do you think will happen if you refuse to submit to a government “request” to do something?

      In some cases they may just order your employer to stop paying you your wage, instead, which is one way in which they can you force you to submit without actual guns being drawn, assuming your employer cooperates. But in many cases, if you persist in your refusal, you will set in motion a series of escalations that will end with very literal guns being pointed at you.

      • Daniel Kendrick says:

        Exactly. What happens if you, say, decide not to pay a traffic ticket?

        Now, a traffic ticket is not a very serious thing. It’s almost certainly the most likely form of governmental punishment a given citizen is likely to receive. They don’t literally and directly point a gun at you to make you pay it. They just say, okay, here’s your ticket, now mail in the fine.

        But what if you don’t? Well, eventually, they can and will put a warrant out for your arrest.

        What if you don’t go along? Well, that’s a crime called “resisting arrest”, and they will use physical force to compel you to come, like it or not.

        What if you stand your ground and pull out a knife or a gun and point it at the officer, as you would for someone trying to kidnap you? Well, of course, that officer will shoot you, and they’ll put it down under “killed resisting arrest.”

        So even the slightest and most common sanction from the government rests implicitly on the threat of being shot with a gun. Now, this is not a critique of government. It’s true for any action of government, good or bad, that it relies implicitly on the ability to kill you if you don’t go along. That’s the difference between a government command and a polite request.

        (There are toothless laws such as the “Flag Code” which have no punishments for breaking them, but precisely for that reason such things are not distinctively governmental. Anyone can give you advice on how to treat the flag.)

        • I don’t think it’s reasonable to lump many stages of escalating force together and say only the first stage of rebellion is relevant in evaluating the individual but only the last stage of enforcement is relevant in evaluating the state. Let me illustrate by three variations on the problem.

          Variation #1:

          What happens if you decide to skip breakfast one morning? You get hungry.

          What happens if you decide to ignore the hunger warnings? You get hungrier and your body starts to consume itself.

          What happens if you don’t go along with your body’s demands? You die of starvation.

          Therefore the penalty for skipping breakfast is dying of starvation.

          Variation #2:

          You get your traffic ticket and repeatedly make additional choices to escalate the conflict, and it ends with you becoming a revolutionary, overthrowing the government, and establishing your own. Therefore any government action rests implicitly on the hope you’ll commit revolution against them.

          Variation #3:

          It’s your 6th birthday and your mother tells you to pick up your new toys. You refuse and start to throw a fit. Eventually you escalate to relentlessly attacking your mother with a knife or gun, and she is forced to defend herself with a very tragic result. Therefore all requests from your mother rest implicitly on the threat of her shooting you with a gun.

          The three examples I hope demonstrate that we make a mistake when obscure the differences between stages of escalating conflict.

          Now back to the original example:

          The government’s laws are NOT all backed up by a threat of shooting. They are backed up, for the most part, by proportional punishments. The government will not (if it’s following its laws) escalate beyond those; but if a criminal escalates his disobedience, then the government’s response will be similarly escalated.

          • Daniel Kendrick says:

            I think you’re misunderstanding or misrepresenting what I’m saying. The essential point is that consistently disobeying even the most minor state regulation starts you down a path where you either have to give in at some point or get shot.

            Your other cases are different to a greater or lesser degree. Let’s start with the third one, which is completely different. In the normal case, requests from your mother do not rest on the threat of force, but from moral suasion. If you don’t do what she wants, she’ll be “very disappointed in you.” If you never ever talk to her or do anything she says, then you might end up totally estranged, and that’s really the worst than can happen. Your mother can’t make you do something you don’t want to do; violently attacking her has nothing to do with the original decision not to comply with her request.

            (Now, there is a complicating factor when you’re considering children, since parents can use some force in either spanking their children or holding them in “time out”. And the state can get involved insofar as your mother could call the authorities and have you taken to a children’s home—in which case we’re back to the gun.)

            The first one, concerning hunger, is slightly more relevant, but it is still different. Of course, we do have to eat in general at some point, or else we die. But we can consistently decide never to eat breakfast, and we’ll be fine. Nothing forces you to eat breakfast in particular.

            This stands in stark contrast to paying traffic tickets. If you decide never to pay your traffic tickets, eventually they will come and drag you off to jail. Now, there is a trivial sense in which you’re free not to pay the tickets because you can just go to jail instead. But the usual point of punishments like that is that they are worse than the alternative of doing what the state wants you to do.

            So if you consistently decide not to do even something very minor that the state commands you to do, you have two alternatives: give in to the punishment for non-compliance (which would presumably defeat the purpose of not complying in the first place), or resist. If you resist, they will keep increasing the amount of force they use until it is enough to make you go along. Eventually, that’s going to end in deadly force.

            If you decide to resist, it’s not really you who will “escalate the situation”; it’s the state. Say they come and arrest you on a warrant for unpaid traffic tickets. You say, “Well, no, officer, I’d rather not come along.” He’s going to “escalate” by trying to physically subdue and handcuff you. If you respond in kind by beating him in hand-to-hand combat, he will “escalate” by drawing a gun and pointing it at you. If you respond in kind by drawing a gun on him, he will “escalate” by shooting at you. This will continue until you give up or get killed.

            On the other hand, if you decide never to listen to your mother or never to eat breakfast, you can do it as much as you want and no one will stop you.

          • Julie K says:

            @Daniel Kendrick:
            You have a third alternative: try to change the law. If you choose this option, going to jail for refusing to pay the fine may be part of your plan to attract attention and try to get other people to support your efforts.

          • Tracy W says:

            But in all three of those cases you’re doing something additional. You’re not just skipping this breakfast, you are skipping all meals. You’re not just not paying a parking ticket, you’ve become a revolutionary, which presumably means doing something, even if it’s just writing inflammatory articles from the comfort of your living room. You’re not just not picking up your toys, you’re throwing a fit.

            If you just didn’t pick up your toys, but continued playing with them, the consequence would be that your toys stay scattered. The decision to throw the fit, quite a different thing to just not picking up toys, is your first step in escalation. Relentlessly attacking your mother with a knife or a gun is the final step. But none of these are inevitable consequences of refusing to pick up your toys – it’s easy to imagine a 6 year old who just said “No” and sat there stubbornly. (A 3-year old not so much admittedly.)

            It’s easy to imagine a person who just doesn’t pay a parking ticket but doesn’t escalate as well, perhaps out of sheer laziness, perhaps because they are busy typing internet comments. Ahem.

            And one of my best friends skips breakfast regularly and has yet to starve to death.

          • John Schilling says:

            If my objective is to save five minutes on a busy morning, that objective is completely fulfilled when I skip breakfast. There is no requirement that I continue to starve myself.

            If my objective is to not be punished despite having been caught speeding, then there is a requirement that I follow up on not paying the traffic ticket with e.g. resisting arrest. My objective is not achieved until I have somehow avoided all of the escalating sanctions the government will predictably apply.

            Saving five minutes on a busy morning is a reasonable goal that can be achieved by a reasonable cost. Avoiding punishment for speeding is perhaps a reasonable goal but can be achieved only at the cost of contending with armed men who mean to do you harm. And people do occasionally get shot for this. That is part of the price for having traffic cops.

            Given the number of fatalities due to reckless driving, it’s not necessarily an unreasonable cost. Even a libertarian purist would probably recognize driving through a residential neighborhood at 100+ mph as a sort of “initiation of force” against local residents that calls for a forceful response. But you probably won’t get good results if you won’t even acknowledge the cost.

      • Charlie says:

        The trouble I see is that all sorts of things can escalate, and we don’t normally judge relationships by where they can escalate to.

        For example, if I don’t act the way my friend wants, they will stop being friends with me. Withholding affection to manipulate the other person is classic emotional abuse – should we therefore refuse to have friends because, if we don’t do what they want, they’ll become abusers?

        Instead of this antagonistic-case moralizing, we judge most things by their typical behavior. I think this is a pretty solid idea: does government, in reality, do more good than harm?

        Answering this question is a much more important project than finding the intuition pump that makes people maximally outraged.

        • Tracy W says:

          Huh? Not being friends with someone, or withholding affection is “classical emotional abuse”? Seriously? So, if, say, a “friend” steals $100 from me and I cut him out of my life, I’m an emotional abuser?

          And of course, virtually all friends tolerate a fair amount of behaviour by their friends that they personally don’t approve of. Eg I think my best friend says sorry too often, but I value her senses of humour, integrity and curiousity too much to cut off our friendship over that.

    • I don’t believe I am responsible for first pointing out that government commands are ultimately backed by the threat of lethal force, although I did describe the Apollo project as using “the state’s taxing power to take an average of $500 from every family in the country, willing or unwilling—at the point of a metaphorical gun.”

      I have wondered whether I might have originated “Utopia is not an option,” but probably not.

  12. I respect libertarianism as having some strong arguments, and Friedman seems like a pretty impressive advocate, but I feel your analysis is a little too forgiving in parts Scott.

    > But, under private property, love already functions where it can. Nobody is prevented from doing something for free if he wants to
    > If, for those things that people are not willing to do for free, trade is replaced by anything, it must be by force.

    So let’s say there’s a libertarian settlement nestled around a lake. The lake provides resources such as fish. The settlement’s houses also produce have human waste products that can be either dumped in the lake for free or treated properly for a cost. It turns out that when more than 20% of people are dumping the waste into the lake, the fish all die. There’s no incentive for an individual to be the one to stop, but if the group doesn’t stop then they’re all going to starve. Obviously this is a vanilla tragedy of the commons problem.

    But in the spirit of libertarianism the citizens recognise the problem (lets say they manage this without a body that monitors the water) and decide what is needed is a voluntary contract to respond. People agree not to dump their waste in their river, so long as everyone else does the same. The incentive is correct – it’s better than everyone starving.

    Next year rolls around, and it turns out 50% of people still dumped their waste in the lake. Turns out, without a group of professionals to watch for waste dumpage with scientific instruments (one that it’s not worth any individual to buy), no-one knows when anyone else is dumping waste in the lake. So lots of people secretly break the contract. Half the population has to take out loans to import more expensive food. Another year of that will break many families.

    So rather than resorting to force folks improve the voluntary contract. Everyone agrees to put some cash to support a new company/business – Libertarian Lake Inc. This business will “own” the lake, and sign contracts with residents to rent time fishing on the lake in return for an agreement not to dump waste into it. The busines will employ scientific monitors, as well as a couple of enforcers who enforce contract clauses that penalise cheating on the contract. To make sure the company isn’t captured by nepotism, a shareholder meeting is held and a CEO is voted in. While the CEO needs long-term career professionals and some stability in this company, they will get replaced every couple of years based on whether the stakeholders like the job they are doing.

    However, many people simply refuse to sign the contract, or ignore or sell their Libertarian Lake Inc share, and keep fishing and keep dumping. The liberatarians dislike this because they are essentially stealing from LL Inc’s private property. So LL Inc declare that either people sign the contract, or **** off and stop stealing fish from their lake.

    Now would you say LL Inc seems to have some important things in common with a government? I would. Of course, big organisations, whether government or corporations, are often unresponsive, bureaucratic and lack agility. Probably smaller, local, and more choice is better unless there is a natural monopoly, economies of scale, or large-scale organised cheating to fight off. And if we really must have some monopolistic leviathan for those reasons, we really ought to try keep control of it through a well-organised and well-informed democracy.

    > Actually, Kolko argues, they were formed at the request of unsuccessful monopolists to prevent the competition which had frustrated their efforts.

    Previous attempts to break up monopolies were actually attempts to create monopolies? Therefore we shouldn’t try to break up monopolies? Huh?

    > given the power to regulate airline fares

    Generally speaking, neither modern social democrats, liberals or conservatives want to fix prices in any market economy unless there is a monopoly. Everyone knows regulation is a burden (keeping in mind this example was probably selected for its impact). The argument is not that regulation cuts cost, but that it is less costly than letting a monopoly price gouge. I’m guessing socialists probably might want to price fix, but then they don’t believe in market economics in the same way anyway.

    > The best answer I’ve ever heard to the question of how to decide who gets school vouchers.

    He’s made some good points on education I think.

    > I have solved the problem of urban mass transit.

    It’s not clear to me why this is better than buses. Buses at least some certainty, which is neccessary for people to drop their one-person car use for other options. No-one is going to select an option where there is only a 90% chance they will get to the destination in a reasonable time frame. Also, the chaos created by many many cars stopping and starting, competing for fares etc, seems problematic to me in any reasonably big city, compared with buses which are much higher density (can take on 20 people or more at one stop). Finally cars, even with multiple people, take up way more space than buses, both on the road and for parking at both ends. Perhaps I have this wrong, but no I don’t think he’s solved urban mass transit.

    > I don’t know much about urban renewal programs or whether they purport to help the poor; anyone want to weigh in here?

    My uninformed impression is that they are exactly what he says they are. The money should be spent on education, health or some other actual public service instead.

    > This probably needs its own post, but no no no no no no no no

    I feel this kind of thing is a weak point in general. A lot of government work looks like a massive convoluted mess. The problem is, the kind of stuff we expect our governments to do usually involves massive convoluted *problems*, with multi-causal, counter-intuitive, game-theory twists and turns. Just using the elegance of the market sounds great when we have only basic knowledge, but when its our own field of expertise you notice there’s many perverse outcomes a market won’t even try to account for. Mixed economies seem to allow for market forces while retaining the ability to tweak for market failures.

    > After a hundred rounds everyone is a hundred cents poorer, fifty cents richer, and happy.

    Agreed this happens lots, but not where a proper cost/benefit calculation is done. Sadly with an uninformed population its very difficult to convince politicians to actually do one, or listen to one.

    > How much would it cost workers to purchase their firms?

    That is another interesting point. I guess the workers cooperative movement is sort of the closest thing to this. As best I have been able to research, cooperative success rates are better than regular business, but there is a natural incentive/coordination barrier meaning that they are founded/started at very low rates.

    • MWolf says:

      “Previous attempts to break up monopolies were actually attempts to create monopolies? Therefore we shouldn’t try to break up monopolies? Huh?”

      I think the lesson is that you cannot just institute a government agency to achieve some goal, and assume that it will strive for that goal in exactly the way that you intended. Public institutions have their own internal logic, which can to some extent be analysed and predicted just as market economics can. Just as there are externalities, prisoners’ dilemmas, etc, which can prevent a free market from achieving the optimal result, government institutions have their own versions of these pitfalls.

      And one of the things we’ve learned by now is that an agency set up to regulate an industry will, almost inevitably, end up being co-opted by the entrenched members of that industry against outsiders — where “outsiders” can be regular consumers, would-be new entrants into the market, startup companies with disruptive technology, or competing industries. And in many cases that will have been the plan all along, with the established players being the ones lobbying to be “regulated”.

      Anybody who wants to propose a new regulatory agency to “rein in” some “out of control” industry or to “break up monopolies”, had better first be able to explain why we should not expect the same thing to happen this time around.

      • Those are good points I don’t disagree. I just think abolishing government is going a bit far. Strengthening citizen participation and democratic mechanisms, as well as trying to master good government in areas where we need it, seem viable but less drastic. Both governments and markets ought to be considered just tools. The challenge for both seems to be connecting them to the needs of regular people, rather than to the whims of Moloch :/

        • Jon Gunnarsson says:

          I don’t think citizen participation and strengthening democratic mechanisms is likely to improve things. The median voter is a blathering idiot when it comes to matters of politics. And there is no reason for him to rectify this situation since his vote is just on in millions and thus unlikely to change anything. Educating yourself about politics (and the various related disciplines like economics, history, geography, law, etc.) is hard work, so people are only likely to do it to the extent that they find it pleasurable. And for most people that means exposing themselves more or less exclusively to sources that already fit their pre-conceived notions and biases.

          Which is why most people are in favour of all kinds of regulations that have an abysmal track record. Democracy is the problem here, not the solution.

          • It’s a fair point, and I’m willing to consider I might be wrong, but I think it ought to be weighed up against alternative proposals. If we abolish democratic government, I worry we’ll get a government anyway, just one that’s 100% out of control, instead of 70% out of control. With coordination mechanisms for regular people to act together with, there would be plenty of less regular folks quite happy to fill the vacuum of power.

            I think I’d have to agree with the social democractic response to that problem – education, education, education. One thing I’ve noticed talking to Europeans (esp Fra/Ger/Nordic) is the average person has a *much* higher engagement with politics than in most of the English speaking countries. While I think they have other faults this is the least bad solution I’ve seen to the failings of democracy. I can easily imagine a less centralised version working well for the English speaking countries. No matter the system of government, a population of idiots never fares well.

          • * Without coordination

          • Jon Gunnarsson says:

            Within current democratic societies, we have both democratic means and market means of deciding resource allocation. My point is that markets are just efficient, and all around amazing, while democratic means are inefficient, unjust, and oppressive. We should use the former wherever possible and use democratic means only as a last resort.

            To illustrate how crummy democratic decision making is compared to the market, consider a democratic restaurant. Instead of just ordering what you want to eat, patrons are asked to vote for one of a handful of menues, complete with appetiser, main course, dessert, and beverage. Every patron has to eat (and pay for) whatever menu received the most votes. Oh, and by the way, this is the only restaurant in the country. And if you didn’t show up to cast your vote, you have the food delivered to you and you also have to pay for it.

            As for democracy being better in Europe, since I’m German I can speak to that. And I can tell you with confidence that the median voter in Germany is quite ignorant and irrational here also. (Whether more or less ignorant than the median American voter, I don’t know, but I would imagine that it’s similar.) And education does not solve the central problem. The government is already subsidising education by an obscene amount, but none of that changes the underlying perverse incentives. It just doesn’t pay to expend the effort required to be well-informed and to think rationally about politics.

          • I sort of agree with your first point, though only to the extent that by market you mean a functioning market with no monopoly or market failure.

            On your second point I don’t think democracies are even remotely like restaurants. If we must use a bad food analogy think they’re more like food halls. Independent operators are allowed to sell stuff, but so people aren’t vomiting and dying at their tables, the customers choose a person to go knock heads together of anyone who lie about what they’re selling, or who spit in the food, or who make unsafe products and then appear under a new name the next week. And then when the gangster guy at the table next to you spits in your food or steals it, instead of you getting beaten when you compain, management bans the guy from attending the food hall. Also because it makes no sense to have the food stalls providing the lighting for the food hall, you get the food hall people to do that. Because there is a generally good setup you always have lots of vendors who want to sell at the food hall, and so you have lots of choice. As long as you actively make sure the management isn’t controlled by a-holes, things work really well. If that requires printing all alternative management approaches on everybody’s plates and tables, and maybe even spending a little money to make sure they read it, well so be it.

            When you get rid of the food hall, one of the operators hires a smelly dude to stand next to his competitors stalls, and one by one they’ve all been bought out, although no body actually knows that’s happened. Suddenly prices triple. You wander around trying to find the food in the dark between the stalls because its not in any stall’s interest to provide lighting beyond their own immediate area. Also, you get mugged for your food because there is no food hall to kick people out of anymore.

            Actually my food analogy is pretty bad, forget it. 🙂 We should just speak plainly. I’m actually interested in any model anyone can show actually working, including libertarianism. But I’m not yet convinced a country without a government wouldn’t just be rule of the strongest/most ruthless operators.

            I think you’re last point about the incentive gradients is by far the strongest of the three. Perhaps it’s a good argument for much more localised democracy, or at least safeguards to democracy organized at a much more local level. Obviously I won’t deny your experience, but all the Europeans I’ve known personally have said differently – they’ve generally said the average European at least knows the general ideological themes of the major parties, which isn’t the case in some other places. I’ll try to keep an open mind on the issue though.

    • Deiseach says:

      The trouble with government is patchwork legislation. You get things like Megan’s Law (as an aside, why do you Americans insist on legislation with cutesy-poo names like the DREAM Act? Is this blatant contempt for the populace on the part of your government – ‘give this a peppy, appealing name and the yokels will fall for it’?) which are in the vein of “Won’t somebody think of the children?” and “Something must be DONE about this”, and of course, anyone arguing against them is a stony-hearted monster who enjoys drowning kittens.

      So things are lumped in with other things, but nothing is pruned out. And legislation – unless there’s some huge national outcry publicity campaign to make the politicians think “Hmmm, there’s votes/negative publicity in this, better hop on the bandwagon or else!” – gets outdated by circumstances. But nobody in the government really wants to do anything because that will cost money, and money comes from taxes, and the voters don’t like paying more taxes.

      So you get conflicting interpretations, red tape, outdated regulations which do more harm than good, and (as I’m seeing in my current job) shiny new schemes which are already being meddled with piecemeal by politicians in response to pressure from interest groups, which means instead of a streamlined new piece of legislation to address a need, it’s a hodge-podge of a fix-up.

      And I don’t see private organisations being any better, to be honest. So we’re all living in an incorporated township of a hundred thousand people, and running our lives by the market and private law courts. But wait! Something Needs To Be Done! So Sally Smith sets up her campaign to introduce, into the voted on and agreed binding protocols that we abide by in managing our town, a provision for Fuzzy Little Kitten Rescue.

      Who is going to vote against that, and be tarred as a cold-hearted monster who wants to drown fuzzy little kittens? At worst, the majority of people will regard it with indifference and not bother turning out for the vote, which Sally’s mobilised and efficient campaign wins (she got all her supporters and lovers of fuzzy little kittens and the vegan vote to turn out).

      So then what about cute little puppies? Or how about rattlesnakes, why should they be discriminated against? And we get everybody sticking their hobbyhorse in (so long as they can pay for and run successful campaigns to capture the popular vote), and nobody overseeing the entire process to say “Okay, how do we reconcile the Kittens and the Puppies and the Snakes and the I’ll Shoot Any Damn Critter On My Land and the Put Mimes In The Scorpion Pit and the No Don’t That’s Cruelty To Scorpions regulations, amendments, new articles of the constitution, and the pro-animal and anti-animal arbitration agencies making conflicting but binding decisions and the pitched brawls in the streets between Vegans For Virtue and Carnivores Want Veal groups?”

      • Chevalier Mal Fet says:

        “why do you Americans insist on legislation with cutesy-poo names like the DREAM Act? Is this blatant contempt for the populace on the part of your government – ‘give this a peppy, appealing name and the yokels will fall for it’?”

        As far as I can tell, pretty much.

        • Gbdub says:

          Yes, it’s been observed that pretty much any law named after a victim of something will be terrible and full of unintended consequences, because nobody’s willing to commit political suicide by opposing the “Little Orphan With Sad Brown Eyes’ Puppies for the Children Act”, regardless of what’s actually in the bill.

          • houseboatonstyx says:

            @ Gbdub

            Yes, it’s been observed that pretty much any law named after a victim of something….

            Really, I disagree with several points in your post.

            For one, pls distinguish ‘law named for a victim (eg “Megan’s Law”)’ vs ‘law with cute or misleading name (eg “Patriot Act” or ‘Consumer Protection
            blah blah’ or Bush’s “Blue Sky Law” which in fact limited EPA rules, thus letting more smog into the sky. It is the latter that are reworked for months or years by special interests, and in fact need misleading names to avoid or confuse voter opposition.

            Laws named for real, recent victims are not so easily misused. For one thing, there is not time for a lot of baggage to be piled on. For another, in the “Three Strikes Law” (obviously a response to the Polly Klaas kidnapping) a great number of citizens had already organized projects to find the victim as soon as the kidnapping was reported. It was easy for them to transfer that energy to support for a law to reduce similar crimes; and even voters who had not been active in the search, were shocked by the case and would support the law. And the organized supporters would keep a close watch on the progress of the bill and keep it clean.

            All laws have unintended consequencies, and need some debugging and tweaking, but I think the ‘named for a victim’ laws will need less. Also the bugs found in Three Strikes are easy to fix (definition of ‘felony’ for example) and affect many less people (minor criminals) than, say, bugs that have turned up in Obamacare.

          • houseboatonstyx says:

            Woops, no edit button. Sorry.

            Only the first sentence of my post was a quote and rightly italicized.

          • Deiseach says:

            houseboatonstyx (and I appreciate the John Kendrick Bangs reference there), my objection to giving laws public names like “Megan’s Law” (rather than “Amendment to the Wetterling Act, 1996” as it actually is known when referred to as legislation) is that it relies on emotional manipulation and appeals to the public, in order to make the government and/or politician sponsoring it look good, look like they’re responsive to public opinion, and is on the same level as “Call me Dave” Cameron’s attempt to get himself and the Tories re-elected by positioning himself as much less posh than he really is.

            These kinds of laws may be for good purposes, they may be passed in good faith, but the piggy-backing on a popular bandwagon is (a) not likely to lead to coherent and considered thought about the law, its implementation and how it fits into the structure of existing legislation (as I’ve complained on here about the patchwork nature of legislation) and (b) can have unintended side-effects. It is less to do with effective protection and more to do with mob hysteria. And they can be hijacked by tabloid newspapers who whip up outrage under the banner of a campaign for child protection.

            The laws and intentions may or may not be good; the PR focus group recommendation style names are definitely used as subliminal (and not so subliminal) influencing of public opinion. Who, as you say, is going to oppose the “Puppies for Sad-Eyed Orphans” Bill, even if there’s a clause hidden in it about using said orphans as cheap labour in sweatshops?

          • DrBeat says:

            Laws named for real, recent victims are not so easily misused. For one thing, there is not time for a lot of baggage to be piled on.

            No, there is not time for a lot of intentional, malicious baggage to be piled on.

            But they’re way more likely to be destructive just because everyone was acting purely on emotion and nobody stopped to think about the consequences of passing the law besides fulfilling their Something Must Be Done desire.

          • houseboatonstyx says:

            @ Gbdub
            But they’re way more likely to be destructive just because everyone was acting purely on emotion and nobody stopped to think about the consequences of passing the law besides fulfilling their Something Must Be Done desire.

            I feel like I already said this, just in different words, and as a feature not a bug.

            It is the heat of emotion and the Something Must Be Done desire that keeps these bills simple and focused on getting something (simple)done. And keeps a focused group of laypeople watching at every step of the process, guarding it from lobbyists and barnacles.

            Deiseach cited a third category: old bills about debated power and financial impacts, suddenly having the name “___’s Law” slapped onto them. That also is something the group of heated laypeople can watch out for, and focus the continuing popular anger against the politician caught trying to exploit the tragedy.

      • Good point. Part of the problem seems to be that both governments and companies become ends in themselves, entrenching organisational functions that become detached from their actual purposes, such as useful production or compassion or protection or whatever. The only solution I can think of is for people to become increasingly sophisticated and smarter in how they keep organisations from becoming just another arm of Moloch. For that I think you need a very smart, informed population, so that really should be a central goal of any half decent ideology. As far as I can see, the mistake of the left and right is to think its JUST companies or JUST governments that are the problem. Only people and the environment (life) are ends in themselves. Everything else ought to be seen as instrumental, as tools. But we are ill advised to discard our tools. Instead we need to master their use.

    • Mengsk says:

      This could be my lack of reading comprehension, but when I was reading the solution to public transportation, I wasn’t sure exactly how you know, when you’re getting in someone’s car, you know that this car will actually take you in the direction you want to go. Would anyone care to enlighten me on this?

      • With today’s tech a phone app can match destinations. I still don’t think it’s ideal. But I’m not certain how it would work in 1970? I still think buses are the well-organised and relatively low-hanging alternative. Plus it can be somewhat local, and you can use markets for pieces of the system like bus production, maintainence etc without too many problematic results. So it doesn’t have to be a huge national government leviathan.

        His idea is still creative and interesting though. We definitely need more deep thought put into transportation.

      • Tracy W says:

        Stick a note written on cardboard in one of the car windows? (Obviously the note could be lying, on the other hand, I’ve been on a few London buses that abruptly were withdrawn from service and abandoned us customers.)

    • Deiseach says:

      But the university proposal is really bumped-up substitute teaching. And what university is going to agree to divert a portion of its tuition fees to pay an outsider rather than one of its own?

      Either (a) they permit others as well as the students to attend the lectures and charge an entrance fee, so they are not handing over their money to someone else’s benefit or (b) they sack their own teachers and do the ‘substitute teacher’ model, where someone who is self-employed or freelancing teaches the course on a hired-per-semester basis. Naturally, the long-established and big names will get the biggest fees; the young academics trying to get a foot on the ladder will be cost-bidding against each other and trying to contract for jobs on “lowest tender” basis.

      Freelancers and self-employed and subcontractors and interns working for the experience, not for pay, are getting more and more popular nowadays, as this cuts costs for businesses. But it’s not the most stable of careers, you have to deal with all the costs and paperwork of being self-employed re: tax, insurance, etc. and it’s not for everyone.

      • Given a lot of uni is sitting and listening to someone lecture, then reading a list of texts by yourself, it’s hard to see, for good or bad, how it’s not going to move to an online model with a very granular market not just for courses but classes and lecturers. The main question is what structure will allow consumers to make informed decisions (there are HEAPS of dodgy half-assed “educators” out there, and that’s really hard for a student to identify), and how do you prevent macro-level skill shortages.

    • John Schilling says:

      So let’s say there’s a libertarian settlement nestled around a lake.

      I think you really meant to say “anarcho-capitalist” there. The average libertarian settlement there would be no problem: the local government would long since have passed a law against dumping toxic waste in the lake and hired the scientists and inspectors to figure out who is doing the dumping. Along with a few gunmen to follow up on anyone who doesn’t take the hint of the official “knock it off” notice, with the whole thing paid for by a relatively trifling property tax.

      Yes, David Friedman is perhaps the most talented and persuasive writer on the libertarian side these days, as well as being an amazing and very nice guy and all that, but his brand of libertarianism is at least a standard deviation farther out on the “anarchy” axis, and we’ve got a perfectly good term for that.

      • The terminology seems to shift a bit, and I feel quite a few self-identified libertarians don’t see local government as the ideal situation either, but I don’t disagree with your general point on getting the language right. Also, your point reminds me of a common rule-of-thumb about using the lowest level of government that gets the job done. Can’t quite remember the exact wording though.

    • coyotespike says:

      That’s a well-articulated and reasonably convincing rendition of the Tragedy of the Commons.

      Your story with a private corporation doesn’t need to be fictional, though! “Public-private partnerships” fail as often (maybe more often) as they work, and as you say they’re government by another name.

      However, the traditional libertarian answer to the tragedy of the commons is “privatise the commons” – genuine privatisation, where individuals own the lakefront and are hence incentivised to watch it.

      Further, your points about an autonomous corporation are well-taken – but let’s remember that governments are also corporations, basically (in fact, cities are formed via incorporation, and the American colonies were chartered as well). And governments are involuntary corporations, and every bit as hard to control as ordinary ones.

      • James Picone says:

        Unless one individual owns the entire lakefront (and how do they guarantee people will sell?), selling the commons doesn’t work as a solution. Notice that the presentation already assumed that the commons was parcelled off into lots that people owned, and they took the logical market step of banding together and pooling resources to form a corporation that will buy out the entire lake, and it still doesn’t work because some people on the lake won’t sell (maybe they want to extract short-term value and to hell with the long term. Maybe they’re arseholes. Maybe they’re sentimentally attached to owning the land, but not enough to not exploit it. Maybe they realise that the corporation really really wants to own all the lakefront, and thus they can charge an extremely high price for their land)

        These kinds of things are really nasty problems to resolve without a government.

        The capital city of South Australia, for example, draws the majority of its water from a single river system – the edge of the Murray-Darling Basin. It’s close to the end of the river system, with the much-more-populous states of Queensland and New South Wales closer to the head.

        Farmers in Queensland want to use the water in the river system to grow cotton, rice and sugarcane, because they’re pretty profitable. Fortunately for them, they’re near the head of the river, and unlike South Australia they’re on the right side of a rain shadow and aren’t a desert. As a result, pulling oodles of water out of the river system for extremely water-intensive crops like cotton in inefficient open-channel irrigation systems is a rational economic decision.

        New South Wales is further down than Queensland, and they, too, are on the rainward side of a mountain range. They draw a fair amount of drinking water out of the river, get some from rainfall into catchments, and do a bit of agriculture using the river water. Overall, more comes out of it in New South Wales then goes in.

        Then it gets to South Australia. Wine growers northeast of Adelaide use some of the water for extremely profitable agriculture, but because there’s so little water left in the river by now, the governmental body that handles water allocation inside the state (the equivalent of the private ancap one you might get if you’re really lucky) has pretty high prices on the water, so the wine growers use extremely high-efficiency irrigation techniques.

        Finally, Adelaide gets to draw nearly all of its drinking water out of the river system.

        Suddenly, a bunch of drought hits Australia (starting in 2003). Adelaide is hit hardest, partially because it’s a desert, partially because they’re at the end of the river. Progressively more severe restrictions limiting what you can do with water coming out of the Murray-Darling are instituted by the government, because there’s a real risk of quite literally running out of water.

        Meanwhile, Queensland farmers are still pulling more water out of the river system than the entirety of South Australia, and wasting half of it in inefficient irrigation systems.

        Because of much-reduced flow down the Murray, the mouth of the river is actually backfilling from the ocean, and salinity at the end of the river is going up, requiring some engineering projects at the river mouth and further threatening Adelaide’s water supply.

        The various state governments are continually bickering over various water-use restrictions, requirements to let certain amounts of water through, whether or not various dams and storage facilities along the river should empty into it or not, etc. etc.. The Federal Government occasionally intervenes. A precarious balance is maintained, while global warming makes droughts worse and more common and makes rainfall much more high-intensity (Queensland recently had the worst drought in history. Even more recently, they had their worst flood in history.)

        That’s a real-world tragedy-of-the-commons with multiple layers, spread out over a 3750-kilometre-long river system, involving a resource that is very much required for life.

        I can’t see a viable market solution. I don’t think it works without overarching governing bodies that have the authority to make people take their deals. Let me step through some of the options:

        – People in Adelaide could collectively form a water corporation that buys out as much of the water rights in the Murray as they can get and provides members with it. The corporation uses profits to pay people upstream not to use water from the Murray, either by straight-up paying them not to use water rights they own, buying the water rights upstream, subsidising more efficient irrigation or less water-intensive crops, whatever. Problems: No way for the Adelaide Water Corp to actually get all the water rights along the Murray in South Australia. If a wine-grower refuses to sell, and extract as much water as they damn well please, and undercuts the AWC by not sending money upstream, their only option to stop it is to try and buy them out – which could cost a *lot*. And maybe the wine-grower would prefer the certainty of short-term large profits now to still having water if nobody else plays his game a decade from now, or two decades. Remember, the market doesn’t select rational behaviour by making people be rational, it selects it by letting people do what they damn well please and having irrational options fail. The irrational options failing, in this case, mostly means that there’s no water in Adelaide and things are desperate. Similarly, a sufficiently determined jerk or idiot up in Queensland will lose out eventually to neighbours who take AWC’s subsidies/buyouts, but it’ll take long enough that it’s a real problem.

        – Don’t live in Adelaide, or in South Australia in general. Deserts are stupid places to live. Problems: SA’s wine industry is pretty damned profitable. Losing that entire productive industry because something upstream has more convenient access to a resource they require seems like kind of a waste. Similarly, barely using a million square kilometres of land because some people upstream find it slightly cheaper to use water inefficiently and we can’t guarantee cooperation seems like a massive waste. The equilibrium where SA exists and farming in Queensland is slightly more expensive and slightly less water-intensive is almost certainly better overall, but we can’t get there without mechanisms to force cooperation.

        – One company could try to buy out the whole river and sell water allocation. If the equilibrium where SA exists is better overall, they should be able to make a larger profit selling water to SA, and should thus refuse to sell so much water to Queenslanders that SA can’t exist. Problems: They still have to actually get all those water rights, and a few people refusing to sell sinks the enterprise. Also, I sure hope this single company is perfectly rational all the time, because a smaller competitor rising up and trying to eat their lunch is going to completely break their ability to enforce cooperation. Isn’t this a monopoly, as well, with all that implies about ability to set prices? They’d only be limited by other sources of water that could substitute, such as groundwater (not long-term), desalinisation (quite expensive, but it’s a ceiling), and trucking in water from somewhere with lots of it (so, so goddamn expensive).

        • Ariel Ben-Yehuda says:

          The “textbook” solution is for the owners of the Murray’s water at Adelaide (probably the city) to pay Queenslanders to use efficient irrigation, at essentially Adelaide water pricess. There should be no significant holdout problem – here inefficient holdouts are economically isomorphic to people spilling water into the desert, which are not much of a threat. I mean, the river provides essentially free water transport between Queensland and Adelaide, so the price of water shouldn’t differ by more than that.

          • Sure market-based and sensible, but the argument arises out of who owns the water and who should pay who? I mean people at the head could just take the lot and demand payment to do anything less. Having a interstate government body that “owns” it and attempts to auction water rights efficiently is one solution, provided you can keep that body from being captured by one of the interests.

          • James Picone says:

            The price of water will also differ because of the different uses it’s being put to – Queenslanders value it mostly for irrigation, for Adelaide it’s their only significant source. Presumably that means larger Adelaide is willing to pay more to farmers in Queensland than they would otherwise, so not a problem.

            The problem is this bit: “Murray’s water at Adelaide (probably the city) to pay Queenslanders to use efficient irrigation, at essentially Adelaide water prices”

            In AnCap world, it’d be quite unusual to have one person own all the water rights, wouldn’t it? That’s a monopoly, surely, and the libertarian group here has been quite clear explaining that monopolies can’t happen.

            Say there’s a single large company that owns most of the water rights in Adelaide, Adelaide Water Corp. Say there’s someone else who owns land the river passes through, upstream – Bob. If AWC is paying people in Queensland to irrigate efficiently, then selling water to people to make a profit, and Bob doesn’t pay Queenslanders, then Bob can undercut AWC significantly and still be more profitable than them. Surely that’s an economic incentive that utterly sabotages that solution?

            Even if Bob is clever enough to see that driving AWC out of business will really suck in the long term, and so refrains, Jerry upstream might not be so far-sighted, or Kim next door might do it, and so on. Market competition forces you to be a jerk, or you lose when someone else does it first.

            In the real world, the government handed out far too many allocations allowing people to draw some amount of water a while ago, and they’ve been trying to buy them back ever since. The prices have spiralled upwards into absurdity as a result. I see no reason why a similar situation wouldn’t result in similar situations here.

          • @ James Picone

            I think the idea is the government body owns the whole river, works out the total water available, reserves a proportion for environmental reasons, then auctions water use finite quantity permits which equals the quantity of water available. The auction, not the state sets the prices. Permits can be traded as needed, and you don’t have to worry (putting aside evaporation rates) whether extraction is at the end or start of the river. So you get the advantage of efficient market allocation, but no risk of overuse, and no manipulative practice unless someone buys like half of the permits and tries to resell them (which the gov needs to be empowered to prevent). Also, state governments have to pay the federal/national authority like anyone else.

        • Doctor Mist says:

          I can’t see a viable market solution.

          What you’re really saying is, “It’s complicated.” You haven’t made a stunning case that the governmental solution works very well, either. Your suggested anarchist-capitalist solutions are all astonishingly simple compared to the convoluted governmental “solution” you describe, so it’s not terrifically surprising that you can poke holes in them. Suppose as an alternative to an an-cap proposal I say, “Government would work better – just create an emperor who says who gets how much water, and everything will be handled smoothly!” Not hard to pick holes in that either.

          • James Picone says:

            Well it obviously works some, because there’s still water in the Murray by the time it gets to South Australia, and there absolutely wouldn’t be any left if there wasn’t anything in place.

      • Squirrel of Doom says:

        I think you need to go a little further: Someone needs to own the whole lake. The lake owner will have the right incentives to keep the lake reasonably clean and useful.

        You can also imagine some entity owning only the pollution rights for the lake.

        How to get to this from some beginning state is an interesting problem that I don’t have any deep insight in.

        • In my example it is privately owned, by a joint stock company. As far as I understand this is the approach favoured by non-anarchist libertarians? Perhaps I have it wrong. The only other non-government solution I know of is “they who first claim it, own it”, which I’d personally object to as it incentivises inefficient squatting and isn’t compatible with the pricing of environmental damage, which I support.

          • Squirrel of Doom says:

            Well, according to the Coase Theorem, it doesn’t matter much how ownership is initially organized, it will drift towards an optimal solution as long as property rights are clearly defined.

            So I don’t know what the best setup for this lake is, but I expect the market to sort that out.

            I can see how you might find that childishly utopian, but I think the science is solid.

          • I don’t think it’s childish by any means. In the radio waves example it may be true, provided you asssume the initial allocation is not unacceptably unfair. However, I think it fails to engage with the problem of monopolies. If competition is or becomes limited, then the monopoly can charge an inflated, inefficient price. Centrist logic is to put it in government hands and auction usage to achieve economic efficiency without the price distortions of a monoploy. That would contrast to command/arbitrary based allocation, or simply allowing the price gouging, which I understand to be the socialist and libertarian approaches respectively.

            Also, it’s unclear how some goods like clean air could be assigned property rights in a remotely fair or practical way.

    • cassander says:

      >Of course, big organisations, whether government or corporations, are often unresponsive, bureaucratic and lack agility

      big organizations that get too unwieldy that aren’t governments eventually go out of business. because people stop giving them money.

      >Previous attempts to break up monopolies were actually attempts to create monopolies? Therefore we shouldn’t try to break up monopolies? Huh?

      Who cares most about the regulation of industry X? the people who work in said industry. therefore, they will spend the most effort to influence the regulation, and make sure it happens to their benefit.

      >Generally speaking, neither modern social democrats, liberals or conservatives want to fix prices in any market economy unless there is a monopoly.

      Except for the single payer advocates, and free education advocates, and the pro-rent controllers, and the supporters of a minimum wage, and so on. THey have, thankfully, mostly stopped claiming that they should set prices for the entire economy all at once, but they do want to set prices for whatever swathe of it falls under their gaze.

      >Everyone knows regulation is a burden (keeping in mind this example was probably selected for its impact).

      Knows it, perhaps, but does not act like it.

      >I feel this kind of thing is a weak point in general. A lot of government work looks like a massive convoluted mess. The problem is, the kind of stuff we expect our governments to do usually involves massive convoluted *problems*, with multi-causal, counter-intuitive, game-theory twists and turns.

      And we should stop doing that. If you have a clear, unambiguous goal that everyone agrees on, like kill all the nazis or invent atomic bombs, government can get it done, no matter how technically complicated it is. Where governments fail is when they are asked to make multiple tradeoffs between competing goals.

      Compare Apollo era NASA to shuttle era NASA. Apollo era NASA had a difficult, but straightforward goal, get to the moon. everyone from Webb to the janitors knew that was the goal and did their part to make it happen. Shuttle era NASA lost that. they were supposed to explore space (whatever that meant), but not spend too much money, and don’t get anyone killed, and oh, help the military launch satellites into orbit, and also don’t shut down any facilities in any part of the country where there’s a congressman, and so on. Despite being largely the same people, they technically underperformed instead of overperformed, got mired in politics, and basically wasted several decades and enormous sums of money.

      Politicians are in the business of pretended that complicated problems have simple solutions, then getting us to pay for them. We should stop letting them.

      >Just using the elegance of the market sounds great when we have only basic knowledge, but when its our own field of expertise you notice there’s many perverse outcomes a market won’t even try to account for.

      the fact that markets are not perfect is not proof that governments can make them more perfect. It isn’t even evidence that they can.

      • > big organizations that get too unwieldy that aren’t governments eventually go out of business. because people stop giving them money

        And people can vote out government expanding politicians in favour of government shrinking politicians,

        • cassander says:

          that is massively less efficient. If I decide that company X is doing a bad job, I can stop giving them money and it will affect their bottom line today. If the government is doing a bad job, I have to convince at least 51% of the country to vote to change something, an effort that takes years, and might fail.

        • Because governments ignore opinion, and invariably find veung voted out a rude surprise,

      • > big organizations that get too unwieldy that aren’t governments eventually go out of business. because people stop giving them money.

        Established monpolies have multiple advantages that don’t relate to product quality, such as economies of scale, a bank balance that allows predatory trading, creating de-facto proprietry standards that ensure lock-in, and in rare cases less savoury tactics. Product quality is all we really want companies competing on, so if we establish a government that favours small business/startups, the economy overall will be better off.

        > Who cares most about the regulation of industry X? the people who work in said industry. therefore, they will spend the most effort to influence the regulation, and make sure it happens to their benefit.

        I think that’s a good point, and we ought to be wary of such problems. But if you remove government involvement they’ll take the steps to crush new entrants anyway, because now there’s nothing stopping direct attacks. A better solution is to enshrine anti-monopoly attitudes and legislation, so that neutral economists, under strict public scrutiny, write the laws with industry consultation, but strict punishment for subversion of the process. Everyone wins, because big companies are getting screwed by all the other monopolies the same as regular people do. But you need openness and strict punishment for subverting the process.

        > Except for the single payer advocates, and free education advocates, and the pro-rent controllers, and the supporters of a minimum wage, and so on. They have, thankfully, mostly stopped claiming that they should set prices for the entire economy all at once, but they do want to set prices for whatever swathe of it falls under their gaze.

        I think only minimum wages and free education are commonly held to by social democrats, who at least my country don’t advocate rent control aside from a tiny amount of public housing for people who fall through the cracks. Liberals and conservatives seem to be backing off even on those. In any case the overwhelming majority of prices in the economy are not fixed under even social democrats these days.

        > And we should stop doing that. If you have a clear, unambiguous goal that everyone agrees on, like kill all the nazis or invent atomic bombs, government can get it done, no matter how technically complicated it is. Where governments fail is when they are asked to make multiple tradeoffs between competing goals.

        Well, because no company in it’s right mind would take on strange multi-casual problems, often involving non-excludable goods with no hope of profitability, I don’t know what the alternative you’re proposing is. Markets are great, but they don’t do everything, and can cause harm from time to time. If we’re not going to use governments to fill the gaps we need to propose something else. Like I said, I think governments, markets, they’re all just tools for the benefit of people. The solution is not throwing out our tools. It’s learning what each tool does and what it’s dangers are. Then we can use them masterfully.

        > Politicians are in the business of pretended that complicated problems have simple solutions, then getting us to pay for them. We should stop letting them.

        Here here to that. Never vote for a candidate that talks in slogans.

        > the fact that markets are not perfect is not proof that governments can make them more perfect. It isn’t even evidence that they can.

        I don’t think I argued that. However, you don’t appear happy with even a mixed economy, so wouldn’t you say that, to be fair, instances of government failings aren’t proof that government always makes things worse? How about we use the right tool for the job, rather than having a favourite tool. We just need to make sure we understand our tools and their dangers, and spend time maintaining and cleaning them. At the moment we spend most of our time arguing whether one or the other is better, so all our tools, markets and governments, are slowly becoming a rusty, degraded mess.

    • Cryptonomicon says:

      when its your own field of expertise you notice there’s many perverse outcomes a market won’t even try to account for

      This is exactly what I thought about when reading these passages. It’s certainly suspicious that the only strong objections happen to be in the area where the author (Scott) is an expert. To me, this is certainly enough to question the validity of the whole book.

      This is actually Occam’s razor betraying those who don’t know enough… When you have little knowledge about a field, it is very easy to come up with a simple and clean model that explains everything you know. I used to be naïve to the point of believing that the more you know about something, the closer you’d get to the simple model that explained everything.

      In the end, 4 years and a half of medical school made me see that in mostly everything that matters, things only appear to be more complex the more you know, and simple models become less and less useful. In healthcare, for example, at the end of the day, there is no way around the fact that we are a bunch of very complex (Turing?) machines interacting in complex ways with each other trying to diagnose and treat the problems of other machines, whose blueprints we don’t really know. Any model simpler than this is a fairy tale for children and unfit for policy decisions.

      I imagine it’s probably the same for every other human endeavor.

      • Agreed! Simple problems had answers we now take for granted. Most of the stuff that is left is complicated. I don’t think the public/private mix can be decided prior to the specifics of any issue.

        • Cryptonomicon says:

          Even though I stand by the gist of my comment, please read the answer by Eric S. Raymond in which he points to a form of selection bias I was overlooking

      • There’s a things-not-seen problem here. I think you’re overestimating the degree to which Scott’s specific objections suggest the book is generally weak because it is difficult to notice the class of claims about which he has specific domain knowledge and does not object to.

        You’re arguing as though every policy prescription in the book about which Scott has domain-specific knowledge raised a red flag for him. If, on the other hand, it’s actually only 10%, or 30%, that should change your estimate.

        You don’t know. Probably Scott doesn’t know, and would have to do a second pass over the book with this kind of estimation in mind to find.

        FWIW, in the areas where I have specific domain knowledge my arguments with the book are minor and technical.

        • Cryptonomicon says:

          First, please bear in mind that I am very sympathetic to the principles of libertarianism, especially individual freedom and strong property rights (I am using the definition of your FAQ, which introduced me to the movement). If you know who Neal Stephenson is, my username probably makes it obvious.

          It actually makes me sad that these principles seem to clash so often with my experience with healthcare.

          Now, answering your points:

          There’s a things-not-seen problem here.

          Thanks for correcting my textbook example of selection bias. I’m actually pretty frustrated I let this one slip, since it is so obvious. I still mostly stand by what I said, though.

          If, on the other hand, it’s actually only 10%, or 30%, that should change your estimate.

          It would certainly change my estimate. Short of reading the book myself (I certainly plan on doing so), I guess we must ask Scott directly.

          Anyway, even this illustrates the point that domain-specific knowledge can expose mistakes in the mathematical elegance of an AnCap society, and people like me need to be reminded of this fact once in a while.

          Additionally, the fact that Scott seems to be so sure that the poor can afford neither healthcare nor health insurance (I can’t check it myself easily as I am blissfully unaware of the gritty details of American healthcare) is a pretty serious objection. Keep in mind that I consider “treament for a heart attack” as a basic service in any healthcare system of a developped country. Even if 90% of what David Friedman says about healthcare is reasonable, this objection is something that must be properly addressed.

          FWIW, in the areas where I have specific domain knowledge my arguments with the book are minor and technical.

          This is extremely valuable input to this discussion. I respect your opinion and adjust my estimate of the book’s credibility accordingly. Maybe I was actually wrong and healthcare is a uniquely weird market compared to everything else. This comment makes this point.

          Now, just let me expand on this point: IF healthcare really can’t be solved efficiently by the markets, you need to create a limited-Gov’t-like entity to handle it. As long as you allow it, you’re no longer AnCap. As you know, limited-Gov’t is a myth, and is likely to grow like a cancer to encompass everything else given enough time. Solving healthcare is important to me, and big Gov’t is a price I’m willing to pay for it if needed. I’d be interested in knowing what your choice would be in this case.

          On the other hand, IF healthcare can be solved without Gov’t intervention, then AnCap seems viable. I doubt it, though, given what I’ve been reading about the reality in the US.

        • That’s a good point but I feel it’s not isolated to just this example. The public sector usually covers things that are for whatever reason not directly profitable. I think there is a systematic correlation between not directly profitable and complex multi-causal problems with non-obvious solutions. Generally, when you make a better widget, your customer is happy. When you try to reduce crime by hiring more police officers, crime statistics may actually go up because there is more crimes being reported and uncovered and recorded. When you hire people to study environmental issues, they unsurprisingly will uncover more environmental problems. And governments/politicians/public servants may get punished as a result. I don’t think it’s just Scott’s example. Government gets stuck with complex, multi-causal non-intuitive stuff that the market won’t touch. Of course, it can also get out of control and do other stuff it shouldn’t, but I think approaching it with a blunt ideological instrument (gov always good/bad) is a really bad idea.

          • Cryptonomicon says:

            I agree with you that government is necessary to provide efficient healthcare, and I stand from the conclusions of my comment.
            I don’t think it’s just Scott’s example either, but using a single point of disagreement without any information on whether Scott agrees with the rest of healthcare-related arguments is still questionable.

  13. mico says:

    “The average cost of treatment for a heart attack is about $15,000. The poverty line for a single person in the US is $11,000. On the one hand, credit cards and loans can make up some of the difference; on the other, heart attacks are by no means even close to the most expensive medical condition. So if we’re talking about actually buying health care then no, the poor literally cannot afford it.

    “But then, why is starving to death such a uniquely interesting endpoint? Why assume that if the poor would die without health insurance we’re morally obligated to give it to them, but if they wouldn’t, we’re not? If we’re amoral or denying all obligations to help others, why care if the poor starve to death? And if we’re not amoral and feel some responsibility to the poor, why not also be concerned about them having a minimally tolerable life?”

    I agree with your line of reasoning, but I am not sure it strongly supports your conclusions.

    Granting that starvation is not a uniquely interesting end-point, why is being unable to afford heart attack treatment, or being unable to afford an ultra-expensive last-roll-of-the-dice cancer treatment? These lie on a continuum of increasing costs for decreasing payback. Food is cheap and wiithout it I will be dead next month. Heart attack treatments are kinda expensive but doable, and they might let me live to 75 instead of 60 (as they did my grandfather). Marginal cancer treatments will bankrupt me and my posterity and have a small chance of letting a patient live perhaps another 5 years, with the expectation value probably in the single digit months.

    My sense is that left-wing moralists argue, “How DARE you say that someone should not receive ALL possible care? Every life is precious!” and Friedman is responding with, “Well actually in my system anyone would be able to afford all possible care anyway.”. And both of them are just flat-out wrong. Even someone with a diamond-encrusted American health insurance plan – yes indeed it’s the best in the world – is not going to be indefinitely given artificial hearts and organ transplants at costs of tens of millions for the tiniest chance of continued life in their old age. There is already more that can be done than is actually done, for the rich as well as the poor. What difference of principle is there between that and denying someone heart attack care because they’re too poor to afford it?

    The real political difference is that the expectation of receiving heart attack care has become socially normalised. And that expectation has become socially normalised because heart attacks are pretty cheap to treat now, relative to the average person’s wealth, not despite it. Almost no one will literally die because they cannot come up with $15k of credit or donations, and most people think it’s worth it, so it’s normal. But for precisely that reason, availability of things like this are not threatened by a market economy.

    The argument against redistribution of healthcare in kind is this: it forces people to buy more healthcare, and healthcare is subject to strongly diminishing returns. At the margin, healthcare distribution will result in expensive treatments of low efficacy being purchased; low cost, high efficacy treatments would have been purchased privately anyway. Since the utilitarian justification of redistribution is that the poor gain more happiness from an extra dollar than the rich (diminishing marginal utility of income), redistribution of healthcare isn’t justified even on redistribution’s own terms. Even if you fully accept the legitimacy of redistribution in principle, demanding it be spent on healthcare is just about the worst rider that can be attached!

    “In other words, people kept winning so much money by suing the makers of pertussis vaccines that all of them except one just gave up and went out of business”

    A similar line of thought is relevant here. If US courts were doing their job (and I believe the English courts still operate more on these lines, but may be wrong) actual damages from this sort of thing would be calculated from the baseline of a realistic assessment of the monetary value of a human life.

    Sanity check: if your estimate of the value of a human life multiplied by the number of people in the country results in a number that is larger than the total capital stock of the country plus the cumulative lifetime earnings of all currently living people, you’ve done it wrong!

    So we are talking about $1-2m for negligently murdering a small child. We are talking order $100k for negligently murdering a middle aged man. We are talking order $10k for negligiently murdering someone who is already past the life expectancy at birth. Then the number should multiplied by factors x,y<1.0 for injuries less than death and uncertainty that the treatment was actually responsible.

    But if that sounds hopelessly utopian to you and you can't assess the results of Friedman's total uprooting of all existing legal precedent (I can't either), standard minarchism solves the problem much more concisely: permit contractual limitations on liability at point of treatment. You will still be able to buy vaccines, you just won't be able to sue the company even if there really is a problem. Or not unless you agree to the company's arbitration service which uses a panel of independent biochemists rather than a jury.

    "If we’re talking about buying health insurance, I understand a very cheap policy would cost about $2000, so the poor can probably literally afford that. I mean, they don’t have a whole lot of fat to trim, but they can afford it in the sense that if they choose to give up their home and car, and live on the streets, then they can have the health insurance."

    I don't mean to nitpick (well actually I do), but are you suggesting that someone, anyone, in the US spends a combined $2k/year on all housing and auto costs? Or is the cheapest US health insurance $2k/month or something?

    Second, the existence of high price floors is a big warning sign that the US doesn’t have a real health insurance market. In particular it seems that US law demands vast swathes of low cost efficiency services be bundled with any and all coverage.

    • James Picone says:

      France, Sweden, Australia and the UK all have excellent public healthcare systems, with varying roles for private entities, varying costs, etc. etc.

      AFAIK, healthcare spending per capita is cheaper than the US in all of them, and outcomes are better for the vast majority of consumers (if you are exceptionally rich, you are probably better off in the US system, which makes it much easier to buy higher-quality care).

      That’s probably a data point that you should consider re: universal healthcare.

      • “AFAIK, healthcare spending per capita is cheaper than the US in all of them, and outcomes are better for the vast majority of consumers”

        The first statement is correct. As best I can tell, there is no good support for the second. A careful examination of the source most often cited (the WHO report) reveals that it contains very little information on actual outcomes. For details see:

        http://daviddfriedman.blogspot.com/2009/09/international-health-care-comparisons.html

      • mico says:

        James Picone:

        I am uncertain how to reply as my post is not, and was not intended as, an endorsement of the current US healthcare system as against those used in other countries or those proposed by left-wing activists.

        If you are referring to this: “Even someone with a diamond-encrusted American health insurance plan – yes indeed it’s the best in the world”, I am referring to those people who are covered by the best American insurance plans, not the average of everyone in America.

    • RCF says:

      “Sanity check: if your estimate of the value of a human life multiplied by the number of people in the country results in a number that is larger than the total capital stock of the country plus the cumulative lifetime earnings of all currently living people, you’ve done it wrong!

      So we are talking about $1-2m for negligently murdering a small child. We are talking order $100k for negligently murdering a middle aged man. We are talking order $10k for negligiently murdering someone who is already past the life expectancy at birth. Then the number should multiplied by factors x,y<1.0 for injuries less than death and uncertainty that the treatment was actually responsible."

      I don't see how you arrive at your second paragraph, and see even less how you think it follows from your first. Average incomes is about $50,000/yr. Over 80 years, that's $4M. It would only take two years for an average person to make $100,000. And what does life expectancy at birth have to do with anything? It's current life expectancy that matters.

      • Jiro says:

        He said “cumulative lifetime earnings” but that’s not really the correct measure. I f someone dies, they no longer earn anything for what would have been the rest of their life, but they also no longer use any resources for that period. You have to offset their income and the expenses used to stay alive to produce the income. (Of course, staying alive produces utility for the person above and beyond the fact that staying alive means to continue to work, so you might only need to offset some percentage rather than the whole thing.)

      • mico says:

        People don’t usually work for 80 continuous years. Graduating at 22 and retiring at 65 is 43 years of work which gives lifetime earnings of $2.15m with your chosen annual salary. Someone who is past life expectancy at birth is not likely to have any income.

        Jiro: As stated, it’s a rule of thumb. There are many ways it could be made more accurate. My point is that if you are returning damages an order of magnitude greater than those so predicted, the method of estimate damages is probably flawed and will created perverse incentives.

    • “and Friedman is responding with, “Well actually in my system anyone would be able to afford all possible care anyway.””

      I don’t believe I have ever made or implied that claim.

      • mico says:

        Here is the quote attributed to you:

        “Defenders of [government health spending] programs argue that the poor are so poor they cannot afford vital medical care.”

        Strictly you don’t state that they are wrong to argue this, but that is the clear implication. In the commonly understood sense, “vital” seems to mean something like, “basic” or “assumed”, but the literal meaning is “necessary to preserve life”. While some medical care isn’t necessary to preserve life (e.g. treatment for chronic conditions), vital medical care independently experiences diminishing marginal return, and so at some point the poor can’t afford it.

        I think you have tried too hard to avoid biting the bullet – or at least to avoid seeming to have bitten the bullet – that at some point lifespan is going to be determined by income and that that is OK because at some point increased lifespan becomes a luxury good. This isn’t a point of disagreement between left and right because it is a limit imposed by reality, not ideology. The most the left can do is pass sumptuary laws against grotesquely increased lifespan – as implicitly it does when it outlaws private provision of healthcare.

    • Tracy W says:

      “Sanity check: if your estimate of the value of a human life multiplied by the number of people in the country results in a number that is larger than the total capital stock of the country plus the cumulative lifetime earnings of all currently living people, you’ve done it wrong!”

      Why? Cumulative lifetime earnings doesn’t take account of producer/consumer surplus. Unemployment notoriously increases unhappiness on average, the ballpark figure is that it would take an income of about $100,000 a year to make up for it. And I know I often enjoy my non-work time as well. While some of my leisure activities are captured by capital or labour, if all of the value was, I wouldn’t bother doing them.

      • mico says:

        Because capital stock and future earnings are what set the resource base available to be used to increase lifespan. If the total value of all human life were to be judged greater than that of all the material things in the universe and all available human labour then we arrive at an incompossible claim: a demand for resources to preserve life that is greater than the amount of resources available to satisfy that demand.

        I suspect the answer to the apparent contradiction is that the “value” of not being unemployed or of leisure time is somehow norm-referenced against wages. I don’t enjoy playing football any more than a penniless Senegalese boy but the monetary value of that leisure activity by your proposed measure is much greater when I do it than when he does it only because I have more remunerative alternatives that he doesn’t.

        One could argue then that the real measure of total available human labour is the monetary value of the average hourly wage multiplied by all available waking hours, rather than just those the average person chooses to work. But I suspect this doesn’t work well in practice: to get people to work more you have to pay them more, and if you have to pay people more to work for you, the purchasing power of your wages decreases. Leisure and working time probably can’t be redistributed much. So I think this is a fine approach, as a rule of thumb.

  14. Besserwisser says:

    I think any research without direct applications wouldn’t work in a completely free market. How do you want to make money here? Either you would have to keep others from using the technology you invented, keeping us back by quite a bit, or you wouldn’t make any profit at all. And it’s not like this research would be useless. We just don’t know about its applications yet. Companies would essentially have to throw money into a black pit and hope something comes back out. There are factors involved other than how hard working or competitive they are. Not a very promising prospect for capitalists. Space exploration might be one of the areas where it would work best because of public interest in the subject and even there we barely get any private accomplishments.

    • Tibor says:

      Companies do that today. Not all of them of course, but ones like Google or IBM do have basic research department. A friend of mine was until recently working for a relatively small company, which dealth with network security and while that is obviously applied, what is notable is that they also publish their research. One could perhaps argue, they would be less willing to do that in an environment without software patents and copyright (which, being global or useless, would be hard to institute in a stateless society).

      A company does not have to rely on its own basic research either. It just needs to support universities and research centres financially. Why should it do that do companies do that? It means that they can be sure that somebody raises the next generation of scientists who will work for them. The industry pours a lot of money into research, not just particular projects that they directly use, but generally. They want a lot of good people to finish the uni in their town (or area) so then they can easily get highly competent employees…in this level, things tend to be reversed. While a guy with no education and special skills will find it hard to get a job, a company looking for a guy with very high skills and intelligency is going to find it rather difficult to find one.

      Why can’t you just wait for the other companies to spend their money on basic research and then just use it and hire the people from the university (possibly by offering them a higher wage)? I think one partial answer is that the company which gives a lot of money to that university generally is on very good terms with it, its faculty is cooperating with then and they are well attuned. They can make sure the students are as well prepared for working in their particular company as they can.

      Of course, not all research fields would be as well funded as they are today. Some probably better, some less. I would expect most social sciences to go down, everything else to go up or stay more or less the same. Still, there were historians prior to state financing, even though it is something much more dificult to apply commercially than say computer science or chemistry. This was (I guess) mostly paid by rich people who were interested in that kind of research and who were in a sense buying reputation through this (also this is how a lot of maths used to be funded). Today people are far richer than they used to be in the middle ages and through various foundations one can probably fund a lot of research provided than someone other than the researchers is interested in it (which, although it might be my pro-STEM bias, is not the case with a lot of social science research today).

      • Besserwisser says:

        I guess I have to rectify my statements in that companies do some basic research. However, this is still a heavily under-funded area we speak about here because it’s hard to explain to people why we need it. Would private investors fill up what we will lack in public funding after we got rid of governments? Would they invest even more? If the latter is true, why aren’t they already doing so? People are already donating to basic research, I see no reason they would donate more once they stop having to pay taxes.

        • Tibor says:

          Because they now can use the fruits of tax-funded basic research for their own applied research. But they need the basic research and they know that. Of course, you cannot expect every company to fund that, basic research is a project with a long term return (sometimes extremely long term…consider Riemannian geometry without which Einstein would have it way more difficult to formulate his theory of relativty … without which GPS navigation would not work today – a project of more than 100 years before the first widely used commercial application…although mostly it does not take this long). But since you can eventually make advances in the applied research only with prior advances in basic research, and you want to make money on the former, you it is profitable to pay for the latter (which is why google does it). And even if you publish the basic research, if you have the people who came up with it, i.e. the people who understand it the most, working for/with you, you can probably get a commercial application way faster than the competition who first has to figure out what that new basic research even means (this is not as easy sometimes).

          In a sense, tax funded basic research means subsidizing (mostly) big businesses with tax money from everyone. One could argue that it pays off, maybe it is true, maybe not. In any case, those businesses need that research and if they cannot get it for free like today, they will pay for it.

        • There’s an argument to be made that areas of research which are under-funded under this model deserve to be under-funded.

          • Besserwisser says:

            One counter-argument with a much wider application would be that some things have value beyond monetary compensation which can’t be paid by a small number of enthusiasts and visionaries alone.

          • TeslaCoil says:

            @Besserwisser: I accept that there is a category of things that have value beyond monetary compensation which can’t be paid by a small number of enthusiasts and visionaries alone.

            I’m still not convinced that the research that gets under-funded under this model belongs to that category.

        • Jon Gunnarsson says:

          How do you know that basic research is heavily under-funded? (And what exactly do you mean by “under-funded”?)

          • Besserwisser says:

            It’s what scientists generally say about the state of affairs. Granted, those working in basic research have an incentive to do so but as far as I’m aware that sentiment holds true for many applied researchers as well. The fact that companies already invest some money into basic research shows how even they think public funding alone isn’t enough.

            Under-funding in this case means the amount of money we could still invest before we stop having improvements in quality of life is vastly higher than what we spend now. And if companies think it doesn’t pay off to invest in basic science beyond a bare minimum in order to keep themselves profitable? Then they aren’t going to invest in it, leaving the world a poorer place than it could be.

          • Jon Gunnarsson says:

            Frankly, I assign very little credibility to scientists saying that science is under-funded. Very likely they’d be saying the same thing if science were in fact over-funded. How many scientists are saying that there should be less funding for applied research?

            As for your second point, If I understand you correctly, you are saying that because it ordinarily does not pay to do basic research, the fact that firms are doing it anyway is evidence that basic research in under-funded. But earlier you used the claim that basic research is underfunded as support for why private funding is not sufficient. So it seems your argument is circular.

          • Besserwisser says:

            There are a lot of scientists who would argue that applied science get too much money in comparison to basic science. And if you’re not trusting any scientist in regards to their funding, who exactly would you trust? I would expect some amount of expertise here.

            I’m not exactly sure where exactly you think my logic is faulty? If public funding was enough to finance basic research, companies wouldn’t invest additionally, meaning by the firms own admission we at most adequatly finance science only if we consider their contributions as well. If we cut public funding altogether, firms can only be expect to use as much money as private and public entities use right now or else they would invest more right now. I guess the argument then would be that firms will use the money more effectively than governments but I don’t see them quantifying something financially the smartest people in the world aren’t yet capable of understanding.

          • Jon Gunnarsson says:

            Is there really a substantial number of applied scientists who believe that some of their funding ought to be re-directed to basic research? If so, then I would indeed count that as reasonably strong evidence that basic research is under-funded relative to applied research (but it wouldn’t tell us much of anything about whether science as a whole is over- or under-funded).

            If I interpret you correctly, you use the claim that basic research is under-funded as part of your argument for why purely privately funded science is inadequate and public funding of science desirable. And then you use the fact that private firms invest in basic research as an argument for why basic research is under-funded. But this argument only makes sense if you implicitly assume that privately funded basic science is inadequate and public funding of basic research is necessary, which is what you originally wanted to show. So your argument implicitly assumes it’s own conclusion to be true, i.e. you’re begging the question.

          • Besserwisser says:

            You could probably find some applied researchers who have that opinion but I would have to wonder if the incentive to say so is greater than their own self-interest. There are also scientists who argue for positions they wouldn’t directly benefit from, such as ones employed in the industry arguing for more government funding for scientists in the public sector. Would you consider their opinions to be trust-worthy?

            There are also arguments made on this blog how you essentially can’t overfund science because the potentials are too great but I’m not sure I want to argue that point.

            I did specify science could be adequately funded. But arguing science is overfunded would mean firms don’t employ their ressources as efficiently as would be necessary to maintain it. Science could be under-funded regardless of whether or not firms invest in it but the fact that they do spend money on it indicates to me at least that public funding isn’t sufficient. Even if science is over-funded right now, we run the risk of under-funding once we privatize it.

          • Tracy W says:

            About under-funding, the puzzle is that the number of scientists has probably increased significantly since 1950 (although outside the USA numbers are scarce), but we’ve seen no speed-up in technological progress. Obviously there’s a lot else going on, including many difficulties with measuring technological progress particularly in the services, but the lack of a statistical relationship over the last does cast doubts on the claim that science is being underfunded.

          • Tracy W says:

            “It’s what scientists generally say about the state of affairs. Granted, those working in basic research have an incentive to do so but as far as I’m aware that sentiment holds true for many applied researchers as well. ”

            Applied researchers also have a financial interest in this, as at least some applied researchers could get jobs doing basic research, so more employment ops for applied researchers means better working conditions generally.

            Also, the people who get a degree in science in the first place tend to be people who think that area is valuable.

          • houseboatonstyx says:

            Tracy W says:
            March 23, 2015 at 8:51 am ~new~

            About under-funding, the puzzle is that the number of scientists has probably increased significantly since 1950 (although outside the USA numbers are scarce), but we’ve seen no speed-up in technological progress.

            1950 is a little early. Sputnik went up in 1957 iirc and everybody started saying “The Russians are ahead of us. We need more scientists.” So we trained more, and maybe hired more of the ones existing but not practicing.

            we’ve seen no speed-up in technological progress

            Huh?

          • Tracy W says:

            @houseboatonstyx: yes, 1950 is before the Sputnik crisis and before the big university expansion (the latter not just in the USA) as access to tertiary education was expanded. That’s why 1950 is a good date to pick (and also very often getting data before 1950 is hard, statistics collection became much more of a government priority from the 1930s onwards for various reasons).

            On secular stagnation, Tyler Cowan wrote a book (see http://marginalrevolution.com/marginalrevolution/2011/01/the-great-stagnation-excerpt.html)

      • PDV says:

        For the past century, at least, the companies that fund significant basic research are almost exclusively monopolies or near-monopolies; Edison, Bell Labs, Google, at least one other computer hardware company but the name escapes me (Digital, maybe?). It’s one of the positive effects of dominant companies, in a similar way to pleasant flying experience being a positive effect of anticompetitive airline pricing.

        • RCF says:

          If, in a competitive environment, flying experience is less pleasant, that strongly implies that people prefer cheaper flights to more pleasant flying experience, so being forced to pay for more pleasant flying experience is not, in fact, a positive effect.

          • cypher says:

            Don’t assume zero friction when it comes to choosing an airline. It may not be a product that’s being sufficiently marketed to be chosen, or the information may cost too much to obtain, etc. In the real world you don’t optimize purchases for just one variable.

          • Tracy W says:

            But insufficient marketing and costly information apply equally, or even more so, to hotels/b&bs/hostels/etc (as there’s more different accommodation owners than airline owners) and yet all sorts of different levels of quality are purchasable in there, and there are all sorts of ways of checking quality which people do use (eg Tripadvisor now, travel agents before).

            So the basic hypothesis that people only care about cost when booking flights seems plausible, given that we see that people do manage to care about quality when booking hotels/b&bs/hostels/etc.

    • mico says:

      This might not be a bad thing. Attempts to brute force scientific progress with government money have generally been unsuccessful, see e.g. nuclear fusion or the War on Cancer.

      All the favourite examples of successful government science projects are really examples of successful government engineering projects. The Manhattan Project was primarily about building a factory that could separate useful quantities of U235 quickly; the theoretical underpinnings of nuclear fission had been worked out by others. The Apollo Program took long-understood physics and mostly existing technology and applied it on a larger scale than others could afford. The big particle accelerators are in the same class, being designed independently by tenured staff at universities and then ballooned in size with government money.

      The government doesn’t seem to have any special insight into producing fundamental breakthroughs; it proceeds now, as it did in the 19th century, by putting a few of the most brilliant people in their own offices and letting them do what they want. I don’t think one can either force or prevent the best and most creative people from pursuing science. In any case, even the hundreds of billions of current private endowments are easily enough to provide for these people. Big Science pays the second rank – good but not outstanding people – to do mediocre work. They’d be better off in industry and society would be better off with them in industry.

      • Besserwisser says:

        I wouldn’t call projects with such clear goals as “get rid of cancer” or “find a way to generate energy” basic research. That’s applied science and more likely to be able to be done by private entities.

        People were and are very much prevented from doing what they want in life if there aren’t any direct economic incentives. Tibor mentions how science was often funded by some rich people, often the scientists themselves, who had non-monetary interests in advancing a scientific field. There were certainly many people who could have advanced our understanding of the universe but never got the chance to do so because they were poor or otherwise not in a position to pursue their interests.

        Governments might not have any insight what kind of basic research will benefit us in the long run but that’s because no one has. That’s kind of the thing about it, you do basic research because the potential if you find something useful are huge and might not be found by just trying to work on things you know will help people but you end up with a lot of information you really can’t do anything with financially.

        • mico says:

          Then what stuff are you talking about? Einstein did his best work while a patent clerk. He achieved very little at the Institute for Advanced Study. More broadly, blue-skies thinkers like that don’t need much money. Private endowments to universities are more than sufficient to employ the best few hundred physicists in a given country on a comortable middle class salary, and provide them with office stationery.

          The government becomes necessary when you want to build big experiments and employ tens of thousands of physicists, most of whom are not capable of conducting independent, fundamental research. The vast majority of this sort of research is what you call applied science and even the government grants themselves require clear, measurable goals that can be delivered with high certainty within a couple of years. Very little USG (or other government) physics money goes to pen and paper fundamental theory and only a small fraction of those so employed have permanent jobs.

          Today, I think this is a non-problem. The cost of employing the best 200 physicists and mathematicians in the country indefinitely is on the order of $500m. There are enough tech-interested billionaires in the country that if the alternative were no one doing fundamental science and maths (unlikely anyway) such an endowment would be funded by several people and organisations at once. The reason they don’t appear now is there aren’t enough people worth employing. The universities already get the A-team and this is not a game where the B-team wins any prizes.

          What things like the War on Cancer show us is that science proceeds at the rate at which fruit become low-hanging. Like healthcare, there’s a steeply dimishing marginal return on investment at a given point in time.

          • Anonymous says:

            Then what stuff are you talking about? Einstein did his best work while a patent clerk. He achieved very little at the Institute for Advanced Study.

            Einstein is not typical; why are you bringing him up specifically?

            If you want an example of a great triumph of government-funded theoretical research, take the development of the Standard Model in the 70’s.

            Private endowments to universities are more than sufficient to employ the best few hundred physicists in a given country on a comortable middle class salary, and provide them with office stationery.

            I guess experimental physicists (and all other experimental scientists) are screwed? Developing the Standard Model took a fair amount of experimental work. Physics does *not* work by putting a few brilliant people in a room and waiting; it needs experiments. Experiments are more expensive today than in the 19th century. (It is of course perfectly valid to decide that they are too expensive to be worth funding).

          • mico says:

            I think that in an anarchist society there would be real problems with doing things like building enormous machines to verify theories that do not apply anywhere near energy scales of economic interest, but I would distinguish between two classes of proposed problem:

            1. that without government we won’t get serendipitous blue-skies breakthroughs that turn out to have enormous practical application (e.g. the AC motor),

            2. that without government we won’t get things that are not useful but really cool or aesthetically pleasing to people who are interested in science (e.g. the moon landings, the LHC).

            I think the absence of the first class would be a very powerful argument against anarchism that most people would not tolerate, but the absence of the second is more of a value judgement and I suspect most people simply wouldn’t care. If the US were an anarcho-capitalist country in 1960 that was otherwise stable and as rich or richer than in reality, I doubt many people would clamour to build a government just to answer Sputnik.

        • houseboatonstyx says:

          Governments might not have any insight what kind of basic research will benefit us in the long run but that’s because no one has.

          If you do have any kind of competitors, looking in the direction they’re not looking might give you the best ROI. Especially if they are not looking at X because everyone knows X is impossible.

          Especially if you have a convenient crank wanting to make such a project. Even if it turns out that the globe is as large as everyone else thought, and there really is no sea route to the Indies.

          Queen Isabella for Patron Saint?

      • RCF says:

        “The Manhattan Project was primarily about building a factory that could separate useful quantities of U235 quickly; the theoretical underpinnings of nuclear fission had been worked out by others.”

        It was also about how to get enough U235 together to achieve sustained chain reaction; as soon as the chain reaction starts, it pushes the material apart and the chain reaction stops. This was a significant engineering problem that the Manhattan Project solved.

    • You might be interested in The Economic Laws of Scientific Research by Terence Kealey. He argues that there are indirect incentives for firms to fund basic research, in part because it provides them with employees who are part of the community doing such research with inside access to information that may prove valuable—rather like one reason it pays firms to employ programmers who are part of an open source project. He also offers evidence that government funding of basic research doesn’t have much effect on the rate of progress in the field funded.

      I should add that both of those are based on my hearing a talk by Kealey—I haven’t actually read the book.

      • Besserwisser says:

        I might give it a read some time (no promises) but in my experience firms do bad at indirect or long-term benefits. It might be firms who don’t see the advantages of basic science will eventually be outperformed by those that do but at that point we have to ask whether the time lost they take to work that out is worth the opportunity potentially gained later on.

        I’m also skeptical how you would even go about to measure progress in completely different scientific fields. Maybe some sciences or subfields of sciences are “easier” than others and therefore will advance faster. Maybe governments know this and invest in the “difficult” ones so they achieve any progress at all (giving them a lot of credit here).

        • Tibor says:

          I would be at least as skeptical about governments producing things with rather spread out benefits that happen in the long term. Let’s say I’ve got elected prime minister/president of a country. My main incentive is to get elected next time as well. That is in four years in most countries. Thus, I want things to look really good on the surface (most voters are not going to go deeper as that takes effort and time and the expected benefit to them of doing that in a populace of several million people is negligible, far outweighted by the costs unless they happen to be interested in politics for other reasons anyway) in about 4 years. It usually takes basic reserach one or two decades to produce something that can be applied, sometimes more. But I am not likely to be in office by then. I will pay the political costs of diverting more money to research today (thus taking it from someone else who gets that tax money today, or raising taxes) and someone else is going to enjoy the benefits in 20 years when everything is going to be so great under his administration (and nobody will remember that it was due to my wise decision for the same reasons that voters won’t appreciate it immediately). So let’s say I am a good guy and bite the bullet, sacrifice part of my reelection prospects and do The Right Thing. That may happen occasionally, but generally the party will elects as its leader someone who is the best at giving them political victory, not someone who is the best at running the country in the long run. CEOs of big companies who get elected by the stock holders may face a similar problem, although there at least the (relevant) stock holders have a better reason to be well informed about the consequences of the CEOs actions (including long-term), since their vote has a much higher decision power and a benefit to them of choosing a good CEO is bigger. Still this is probably one of the reasons why companies tend to eventually be less and less efficient as they grow in size.

          • Besserwisser says:

            There’s something to be said about companies eventually evolving into state-like institutions to the point where people might ask what the point of anarchism is in the first place. And if big companies just get outperformed by newer and more innovative ones, then I don’t see how the big ones can permanently support basic science when of they seem to be the only ones to do so.

            Essentially, basic science seems to need big institutions to back it up. Governments are one form of that and while they might not always be the most efficient at it they do invest money which might or might not be spent by other investors when they’re not there anymore. Personally, I’m all in favour of setting sufficiently advanced computers in charge of society. Provided I had sufficient involvement in their development.

          • Tibor says:

            Besserwisser:

            Well, I did not say smaller companies always outperform bigger companies. Ad absurdum that would mean that a guy making cars in his garage by himself should be more efficient than BMW. That is clearly nonsense. The point is just that as a company grows it eventually hits a tipping point where additional size does not make it more, but less efficient. That size depends on the type of business. A hairdresser company does not benefit much from growing beyond a one woman business (I have not seen a male hairdresser yet, although there are probably some). And while there are some bigger hairstyling companies (Klier is the only one I know), most of these businesses are really very small. On the other hand a car maker has to employ a lot of people who specialize in different parts of carmaking. But a carmaker with 50 factories is probably going to be much more sluggish and less well run than one with just 1 factory (or a few). Those more factories bring nothing useful. Then you have companies like google and that seems to be an interesting case, because these search services seem to be an almost “winner takes all” scenario…with the caveat that if you do a bad job, you won’t stay winner for long (anyone still remembers Altavista?). And with all the additional services google provides, it seems to be that the efficient size of a company in that sector is rather large (also, they seem to employ quite a lot of measures to “simulate” being a lot of smaller companies in order to not become too sluggish). So there probably would still be some big companies in an entirely free market, but very likely some of the current big companies would not exist and they would not have as big counterparts, because there would be no political leverage from being big (and so “too big to fail”)

            As for AI running the world, I would not be very keen on that. The problem IMO is not that AI gets malicious or anything, but that you may get what you wish for. There is often a big difference between what you think you told a program to do and what you actually did. If the program is near omnipotent you may end up getting something really nasty while being unable to stop that. You may know better (as your nick suggests 🙂 ), but I would not trust other people (or myself…especially myself) to program such an AI 🙂

        • “I’m also skeptical how you would even go about to measure progress in completely different scientific fields.”

          My memory of Kealey’s talk is that he looked at several cases where government support of a field when from near zero to very generous in a short period of time, and didn’t find any corresponding increase in rate of progress. But it’s a talk I heard many years ago, so I don’t swear I have the details correct.

          • Besserwisser says:

            Still not sure if it works that way. Maybe governments invest when a field shows significant progress to begin with. Seems like a good enough policy on the surface and it would explain how those fields showed so much success before the funding while it might be harder to maintain when all the low-hanging fruit is taken. It seems counter-intuitive that money wouldn’t do anything to improve, regardless how inefficient its distribution is. Research takes money after all.

          • Tracy W says:

            Government funding takes the pressure off to perform.

          • Besserwisser says:

            I would question how you would pressure scientists to conform. A given scientist could work execptionally well and still have no marketable results simply because he happens to be in the wrong line of research, which he couldn’t know beforehand since by definition he works on something nobody knows enough about. It’s even a problem within the scientific community that people will fake the “right” results in order to gather recognition. More pressure doesn’t seem to be the solution here.

          • Tracy W says:

            I would question how you would pressure scientists to conform.

            I presume this is meant to be “perform”. Anyway, I have roughly two ideas:
            1. Give them a clear measurable goal and reward success.
            2. The Georg von Békésy approach.

            If it wasn’t a typo, I got nothing.

            A given scientist could work execptionally well and still have no marketable results simply because he happens to be in the wrong line of research, which he couldn’t know beforehand since by definition he works on something nobody knows enough about.

            Sure. And a given scientist could work exceptionally lazily and poorly and correspondingly have no marketable results. I have no way of telling the difference. Nor does the government. Although possibly the scientist’s manager does.

            It’s even a problem within the scientific community that people will fake the “right” results in order to gather recognition. More pressure doesn’t seem to be the solution here.

            Strawman. I said government funding takes the pressure off to perform. That’s a distinctly different thing to applying even more pressure.
            Anyway, if you’re being funded by industry, faking results is tougher, because people are going to want to apply those results.

          • Besserwisser says:

            “1. Give them a clear measurable goal and reward success.”

            Which can be kinda hard in an area where goals are kinda arbitrary and success random.

            “2. The Georg von Békésy approach.”

            I don’t know how you would enforce that kind of thing or how private entities would be better at it than public ones.

            “If it wasn’t a typo, I got nothing.”

            I would like to say I’m infallible and just won the debate but I already argued your points 😛

            “Sure. And a given scientist could work exceptionally lazily and poorly and correspondingly have no marketable results. I have no way of telling the difference. Nor does the government. Although possibly the scientist’s manager does.”

            Isn’t the whole argument of liberterianism to reduce regulation and the costs associated with it? Seems kinda weird that you use the opposite argument now.

            “Strawman. I said government funding takes the pressure off to perform. That’s a distinctly different thing to applying even more pressure.”

            I’m not sure if I understand your complaint here? It seems like you didn’t like how there’s a lack of pressure as a result of government funding. But now saying pressure is already there and causes problems is somehow a strawman? If there’s a lack of pressure and you want that to stop, then you will have a relative increase in pressure.

            “Anyway, if you’re being funded by industry, faking results is tougher, because people are going to want to apply those results.”

            Or people will fabricate results which conveniently lack applications because they didn’t want to work for it. That’s harder in areas of applied research but totally practicable in basic research because it’s a reasonable expectation that a vast number of projects will have nothing immediately profitable.

    • I know that we’ve gotten a lot of interest in our robots from REDACTED and REDACTED partially because they were interested in the research we were doing even though that stuff might not bear fruit for the better part of a decade.

  15. Anon says:

    This blog post completely failed to sell me on the ideas of this book, Scott.

    I read your excerpts and a lot of places you noted down ideas that were outside your realms of competence that sounded really good and like amazing solutions to the problems plaguing modern society; however, in areas where you *have* developed and demonstrated a lot of competence you noted huge and correct objections to Machinery of Freedom’s ideas which made them unworkable and impractical (e.g. the FDA, Health Care). This leads me to suspect that the overall quality of ideas is similar in all cases, it’s just that in some domains you know why they wouldn’t work and in others you don’t have the relevant domain expertise to know why they wouldn’t work so are carried away by the (admittedly extremely well-written) prose.

    That’s just the impression I get from reading these quotes and your review out of the context of the book; it is possible that Mr. Friedman has supported all of the arguments he makes, that you like here, in the broader context of the book, while the actual arguments that you don’t like he has not supported nearly as well in the book’s context, and that it’s just purest coincidence that the areas you have domain-expert-knowledge are areas where the books’ ideas are infeasible.

    Since the book largely hasn’t been updated since 1973 according to your review, I will likely get the second edition that my local library has and read it myself – it sounds well written enough that it might be enjoyable purely on those grounds even if I turn out to despise every argument.

    • Sarah says:

      I don’t think that’s a fair argument.

      Ancap arguments usually are of the form “I can think of a *plausible* non-governmental way to solve this problem” or “this problem is already mostly solved by non-governmental means in another context.” They’re not detailed policy proposals — after all, nobody has a detailed plan to dismantle the state in the first place. The gist of the ancap philosophy is “if I can think of a reasonably plausible way to do this non-governmentally just off the top of my head, and if non-governmental solutions to many problems abound already, how much more so will an actual anarchist society, full of many people who have the motivation and expertise to solve their own problems, come up with solutions?” It’s silly to expect Friedman to have a workable, detailed plan for replacing every function of government. (If he had *one* plan detailed enough to implement, and the temperament to do so, he might be an extremely successful CEO by now.)

      Someone proposing implementing a particular government policy idea has to convince readers that it will work. Someone proposing anarcho-capitalism has to convince readers that *society as a whole* will *come up* with institutions that work, not that the author is personally a perfect philosopher-king who has the whole system mapped out.

      I myself don’t have a coherent vision of an anarchist society or high confidence that any particular vision will work. I do see lots of examples of voluntary structures that work, and a basic heuristic that if you go looking for a voluntary means of solving a problem, there’s a good chance you’ll find one.

    • Ariel Ben-Yehuda says:

      Scott seems to miss the argument regarding health-care (the $2000/year for insurance has to come from *somewhere* [read: taxes], so if it is paid it is just another form of welfare). His argument for the FDA is that it is needed to deal with stupid courts – which is a problem with government (and it *does* seem that like half of government solutions are to problems created by the same government).

  16. Sarah says:

    I grew up in Hyde Park. Back home we used to refer to urban renewal as “urban removal.” It really is that bad.

    http://www.theatlantic.com/features/archive/2014/05/the-case-for-reparations/361631/, Ta-Nehisi Coates’ argument for reparations, has a long section about the history of housing policy in Chicago, heavily sourcing Douglas Massey’s excellent book “American Apartheid.”

    The bottom line is: racial segregation in Northern cities was a systematic, deliberate state action. You might naively think that residential segregation was simply a natural result of white people having some preference to live near white people, and black people being poorer — i.e. an unfortunate but unavoidable result of free association. It wasn’t. Segregation was the cause, not the result, of long-term black poverty in the 20th century. I’m pretty confident that the Chicago Housing Authority was (and perhaps still is), not just incompetent but evil.

    • nydwracu says:

      Ah, so we as a society don’t need to spend so much effort cracking down on freedom of association after all?

      • Sarah says:

        That’s the basic idea.

        My impression from reading about the history of segregation is that this is *not* the sort of thing I could do accidentally as a well-meaning but IAT-failing white person. It’s deliberate, planned, and state-controlled.

        (Also there’s the issue of speculators who profited by, essentially, shorting black mortgages. That’s technically “peaceful” behavior but it’s squicky. My personal view on that is “don’t”, and I’ve turned down a job that I suspected was a machine-learning-based spin on that investment strategy. Yes, in a perfectly efficient market it’s inevitable that every arbitrage opportunity *will* be exploited, and in a sense it’s on net preferable for all opportunities to be exploited, but I don’t personally want to make my living as a locust.)

  17. Deiseach says:

    I think his airline example falls down; he says there was only ONE major intrastate route for plane journeys in the country.

    Then he compares that to other interstate journeys, and says the fares were cheaper. That’s not comparing apples and apples, that’s comparing apples and oranges. It’s like saying “Which is cheaper: a plane trip between SF and LA or a bus ticket?” (I have no idea which is cheaper: anyone know?)

    I have no idea of American geography, flights, etc. but I went on Google and here we go:

    Distance from LA to SF – 380 miles (roughly) Price of flight from LA to SF – €134 (rough average)
    Distance from LA to Phoenix – 370 miles (roughly) Price of flight from LA to Phoenix – €224

    So even in the Brave New Deregulated World, flights of comparable distance intrastate and interstate are still not the same price. Indeed, one is €90/67% (if I’m working this out right) dearer than the other. Why is this? How so? Perhaps there are other factors involved than just the Cold Dead Hand of Government Interference?

    Also, I think the attack on trade as selfish is not “you should be doing this for love”, it is about selfishness, self-interestedness – you are doing this for money, that is, for profits. So if it profits you to extract every drop of water out of a river, or strip mine, or sack three-quarters of your workforce and outsource, you will do it.

    And if you are appealed to “Consider long-term interests, by conserving the river you will make more money in the long run because you can exploit the resource for a longer time”, then your profits will be affected, your market rivals will report larger profits (because they’re maxing out their exploitation of resources), the share price of your stock will be affected, investors will choose the more profitable returns from your rivals, and you will lose your job as CEO or the company will have the tumbling share price until a strong, confident new CEO is selected who will build up the company going forward – and drain that river dry for short-to-medium term returns (the market may or may not care about profits in thirty years’ time, but the investors and stockholders – for their own legitimate interests of making money on the returns of their investment – want to see as big a return as they can get right now, or within five years’ time).

    • Jon Gunnarsson says:

      You’ve offered a different common attack on trade as selfish. But, and this is Mr Friedman’s point, what is the alternative to profit orientation? It is either doing things voluntarily, for “love”, which as noted has limited viability. Or it is through force, e.g. through regulation limiting what firms may do.

      In your argument, you also seem to be assuming that draining a river, strip mining, or sacking three-quarters of your workforce are inherently bad. How do you know? How do you measure whether this is a good thing or a bad thing?

      The libertarian answer to this is that (for reasons which would take a book or an introductory economics course to explain) what is profitable is a reasonably good approximation for that which benefits society as a whole. So that for example under most circumstances, sacking three quarters of your workforce is profitable iff this leads to a better resource allocation in society.

    • Tracy W says:

      “but the investors and stockholders – for their own legitimate interests of making money on the returns of their investment – want to see as big a return as they can get right now, or within five years’ time).”

      Okay, your investment horizon is five years time. You want to get a big as investment as possible, but some other investors have already grabbed all the investments that return a massive amount of money in 5 years time. You are thus considering two investments with the following promises:
      1. a 5% annual rate of return each year for the next five years, then you get back your principal
      2. will start paying out in 5 years time at a rate of 50% a year indefinitely.

      Your trust in the accuracy of the projections and the overall risk of each project is about the same (obviously there’s some more risk with something due to happen in 5 years time, but let’s say that 1 is a highly speculative new product while 2 is a bit better improvement in some machinery, or the promoter of 1 has a worse track record than 2 or both).
      You say to the entrepreneur promoting 2 “But I want my money back in 5 years time”. The entrepreneur says “In 5 years time, I will have proven the concept, so you’ll be able to sell this for a very high price to another investor as that investor will be making 50% annual returns immediately.”

      Even if every investor wants their money back in the short-to-immediate term, capital markets create incentives to invest in the long-term because you can sell your investment.

  18. The poor get free medical care because hospitals cannot turn away people who cannot pay. For certain procedures the quality may not be a good and there is alto of waiting, but it’s free nonetheless. That creates an economic disincentive for the poorest to get insured. Even if hey do get insured, it’s probably still not enough money to pay for costly procedures.

    • houseboatonstyx says:

      The poor get free medical care because hospitals cannot turn away people who cannot pay.

      Should be “hospital emergency rooms / urgent care”. As of a few years ago, they would patch up a patient temporarily, tell zim to come back to the regular hospital via zis own ‘family doctor’ to address the causitive problem — and if he can’t afford that, he’s out in the cold.

      Our ER/UC’s don’t have the equipoment to do most surgeries or follow through on diagnoses/tests that require a specialist and more than a few hours.

  19. It might be possible to reform our present universities in the direction of such free-market universities. One way would be by the introduction of a ‘tuition diversion’ plan. This arrangement would allow students, while purchasing most of their education from the university, to arrange some courses taught by instructors of their own choice.

    A better solution is to just give the high-IQ kids free education since they are the most likely to benefit from it. It’s a more efficacious use of resources that universal education, and only maybe 5% of the population would be eligible. The government doesn’t need to leave the picture entirely, it just needs to do a better job allocating public resources.

    • Carinthium says:

      Politically impossible in a democracy. Do you have some other way to make this possible?

      • Credentialism can be reduced by replacing costly diplomas with administered IQ tests, SAT , or any inexpensive test that signals cognitive ability, but ultimately any screening program where the results can be interpreted to mean some individuals are smarter than others will be fraught with much controversy, especially if it factors into hiring. T

        • Alexander Stanislaw says:

          Which credentials do wish to get rid of? I’d rather have an IQ 125 surgeon who went to medical school than an IQ 150 surgeon who was self taught.

          Credentialism isn’t only about signaling intelligence. Its a way of ensuring that certain standards in education are being met.

          • for specific fields credentialism is necessary, but you see credentialism for jobs that obviously do not require an advanced degree. This is because employers, understandably, want to hire best and the brightest; smart people learn faster which means less money spent on training.

          • Alexander Stanislaw says:

            Which fields?

            Also, college degree + standardized tests are a stronger signal for competence than IQ alone. A college transcript also signals persistence, consistency, ability to work with others. Not to mention the human capital value of education.

          • Also, college degree + standardized tests are a stronger signal for competence than IQ alone.

            But a college degree is expensive and takes four years; time and money that could be better spent. That is the issue…students taking on too much debt because employers req. a degree, because the degree signals competence when there are better, cheaper ways of signaling competence.

          • Alexander Stanislaw says:

            Once again, which fields?

          • Doctors, law..anything requiring specific knowledge that cannot be obtained though a general 4-year degree, or specialized fields and professions that don’t have 4-years degrees, such as plumbing, welding, hvac, or auto repair.

        • coyotespike says:

          Alexander Stanislaw, the Institute for Justice’s report on state licensing requirements should answer your (entirely reasonable) question for examples of fields which unnecessarily require credentialing. Examples include florists, interior decorators, and hair braiders.
          https://www.ij.org/licensetowork

          Honestly, state licensing requirements are just barriers to entry. In some cases, like barbering, low-income people need loans to pay for the schooling, but if they have prison records (as many do), they can’t qualify for the loans. So an avenue to employment is unnecessarily blocked.

          I agree IQ tests would be a poor replacement for credentialing. One general critique of credentials is that they fail to truly ensure a reasonable standard of quality; before hiring any doctor or lawyer you still have to research them thoroughly (or pay the price).

        • Carinthium says:

          If you could somehow make this politically feasible it would be a very good proposal. But you haven’t said anything about how to calm the voter outrage from an IQ test replacing an SAT.

          There are other problems as well, but that’s the only one I’m skeptical about a solution existing to so I’ll leave you with that one.

    • CAE_Jones says:

      A better solution is to just give the high-IQ kids free education since they are the most likely to benefit from it.

      So like academic achievement scholarships, only more so?
      Those do work well for large, non-ivy-league universities. They’re practically a free ride to most schools. But everyone wants to get into the ivy league schools, so their scholarships might cover half of tuition at best.
      So, are you suggesting making such scholarships bigger and more exclusive?

      • There is the National Merit Schoalrship, but it’s too selective and doesn’t pay out enough money.

        By the conclusion of the competition, a select group of Finalists are chosen to receive prestigious National Merit Scholarships totaling nearly $35 million.

        It does screen for high IQ, but $35 million annual is hardly enough and excludes a lot of people who are smart, but otherwise don’t meet all the qualifications. Since it’s a private organization, understandably it’s budget is limited compared to the federal government.

        Free 4-year private education would be prohibitively expensive, even for a select few. Obama’s 2-year free community college plan is a start, but it would perhaps be better to only make it applicable to those of a sufficiently high IQ and offer more free years, otherwise there would be a lot of waste.

        The issue is textbooks and other expenses, which aren’t covered under Obama’s plan.

        From http://www.brookings.edu/research/opinions/2015/01/20-obama-free-community-college-bad-idea-sotu-butler

        There are Pell Grants, but they don’t screen for IQ, and they don’t offer enough.

        Free 4-year private education would be prohibitively expensive, even if eligibility is restricted to those of the top 1% of intelligence. But to make public education free, according to The Atlantic, would cost $62 billion.

        According to new Department of Education data, that’s how much tuition public colleges collected from undergraduates in 2012 across the entire United States. And I’m not being facetious with the word mere, either. The New America Foundation says that the federal government spent a whole $69 billion in 2013 on its hodgepodge of financial aid programs, such as Pell Grants for low-income students, tax breaks, work study funding. And that doesn’t even include loans.

        But if the government gave free public education to the top 5% of IQ (>120), that would only cost $3 billion. If restricted to STEM, it would be even less.

        So this plan is financially feasible, but would face much bigger political hurdles (from those who argue the screening process in inherently racist because a disproportionately small percentage of blacks and Hispanics, who tend to score lower on IQ tests than whites and Asians, would qualify) than budgetary ones.

        • Meredith L. Patterson says:

          Fun fact: most Texas public universities offer a full-ride scholarship (tuition, fees, books, dorm, and meal plan) to all graduating high school seniors who are also National Merit finalists. This is how I went to college.

          • Anonymous says:

            Ditto for Florida. It’s called the “Florida Incentive Scholarship”, it’s pretty new. As a freshman in college, it’s paying me ~20k (estimated cost of attendence of U of Florida, including dorm, food, etc.).

            Edit: Slight mistake, it’s for students which receive some sort of national merit scholarship, in addition to being finalists. This is slightly more select, but not in practice. My college gave me a $500 scholarship (irrelevant financially, but sufficient to trigger the Incentive Scholarship) basically just for being a finalist.

          • Chevalier Mal Fet says:

            And, of course, you’ve also got colleges that actively headhunt National Merit finalists, like the University of Oklahoma. They offered me, an out-of-state student, a full ride plus a few other benefits (I think they threw a laptop in? I’m not sure, I didn’t take ’em up on it).

  20. Björn says:

    In the 80s the swedish government tried a form of “Employee investment funds” that used profits from corporations to buy shares in the companies and gave the shares to labor unions. They were not popular with the swedish right and they were abolished by the conservative government in the 90s.

    “Employee investment funds : an approach to collective capital formation”

    http://external.dandelon.com/download/attachments/dandelon/ids/DE004A37D1514C41A7951C1257914001FD0A4.pdf

    • Null Hypothesis says:

      There is a difference between giving shares to individual workers, and giving shares to a Union.

  21. lmm says:

    > I don’t know much about urban renewal programs or whether they purport to help the poor; anyone want to weigh in here?

    It tends to boil down to forcing the poor to live in adequate housing further away from where they wanted to live, rather than in terrible housing where they want to.

    There’s an argument for free choice here, of course. But there are coordination problems; e.g. if there is a choice to live in housing that will slowly kill you (lead paint, mould, asbestos, radioactive contamination…) then, in a more tragic and desperate version of the two income trap, wages fall to the point where the poor can only afford to live in such housing. That’s the kind of thing that can be solved by government intervention.

    > It probably says something very important about human nature and politics that the Socialist movement isn’t dominated by the project of doing exactly this.

    You’re surprised that Socialists haven’t pursued a policy of… saving money and buying assets? By definition the Socialists are those people that don’t do that.

    More seriously, if it were that easy to buy everything productive, why hasn’t it happened yet?

    * The rich can always outbid the poor for productive assets. If the poor started trying to buy them, they would push the price up a little, but that’s all
    * As you say, the claim becomes less true by the day
    * If the socialists did all “live like hippies”, that would affect the wider economy

    • W. Peden says:

      “You’re surprised that Socialists haven’t pursued a policy of… saving money and buying assets? By definition the Socialists are those people that don’t do that.”

      Marx wasn’t into that sort of thing, which is how he kept on falling into monetary problems despite a colossal lifetime income, but Engels was, and his skill at accumulating capital and the absence of limits on donations to political organisations in Victorian England were very helpful to 20th century socialism.

    • Ano says:

      “If the socialists did all “live like hippies”, that would affect the wider economy”

      Exactly. Say all the workers decide to cut down on cigarettes and buy assets instead. The net result would be that the cigarette industry would shrink and many of their workers would lose their jobs, and because they lost their jobs, they can’t buy store brand shoe polish, leading to job losses among the shoe polish workers, and so on and on until everyone is unemployed. The only way this works is if at the same time, the capitalists offset the reduction in demand by consuming more, or the workers buy assets by going into debt, or it’s financed somewhere down the line by a reduction in investment elsewhere in the economy.

      • Tracy W says:

        Say all the workers decide to cut down on cigarettes and buy assets instead.

        If the workers are buying assets then someone must be selling them. Whomever is selling assets must have more money once they’ve sold the asset. They presumably spend this money on something else. Such as cigarettes. Or making new assets to sell to the workers, although that’s subject to declining marginal returns at some point (there’s only so many MRI machines we need). Or, if we assume that the asset sellers are all rich capitalists entirely satiated with the material goods of life, perhaps they spend their spare cash funding a moon mission.

    • Jon Gunnarsson says:

      …if there is a choice to live in housing that will slowly kill you (lead paint, mould, asbestos, radioactive contamination…) then, in a more tragic and desperate version of the two income trap, wages fall to the point where the poor can only afford to live in such housing.

      That’s not how wages are determined. What people are paid does not depend on what their living expenses are, but (mainly) on their marginal productivity, i.e. how much additonal revenue their work will generate. This is why real wages have increased drastically over the last two centuries.

      More seriously, if it were that easy to buy everything productive, why hasn’t it happened yet?

      Because most workers have a relatively high time preference. Everyone prefers having good things now to having those same things in the future, but for workers this preference tends to be stronger than for capitalists. Most workers don’t want to live like hippies for years, even if it will mean greater income later.

      • lmm says:

        Only in the presence of unions. Nowadays the rentiers capture any productivity increase and real wages are flat or declining.

        • Jon Gunnarsson says:

          Unions may somewhat increase the wages of unionised workers, but they have very little to do with raising the overall wage level.

          And no “rentiers” don’t capture productivity increases. It sort of looks like that if you only look at wages, but that picture is deceptive since variable pay (e.g. bonuses and stock options) and fringe benefits (e.g. health insurance or retirement plans) have increased a lot over the last few decades. If you look at overall compensation, you’ll see that it has kept up with productivity increases.

    • Julie K says:

      Nowadays, the cheapest housing tends to be undesirable not because of the physical quality of the housing stock, but because it’s in a neighborhood with high crime and terrible public schools. Some sort of school choice would help combat the two-income trap by letting families live in cheap housing while sending their kids to school elsewhere.
      If Elizabeth Warren runs for president, I hope someone asks her if she still supports school choice.

  22. taw says:

    Large scale turning workers into self-bosses project wasn’t attempted, but large scale turning tenants into self-landlords was, many times.

    Results were universally miserable – higher demand for “owning” capital (in this case housing) just made it more expensive for everyone, and on top of that you had rampant NIMBYisms as building just about anything affected someone’s house value, so some people would fight pretty much everything.

  23. Troy says:

    The best solution to this problem would be for any state instituting a voucher system to include, as part of the initial legislation, the provision that any institution can qualify as a school on the basis of the performance of its graduates on objective examinations. In New York, for instance, the law might state that any school would be recognized if the average performance of its graduating class on the Regents exam was higher than the performance of the graduating classes of the bottom third of the state’s public schools.

    This has the same basic problem as basing school funding on test results: it treats children at different schools as interchangeable blank slates. But schools/teachers are not the only, or arguably even the primary, factor responsible for student performance.

    A better idea (and hopefully at least somewhat politically feasible, unlike other solutions which would involve controlling for one of the Elephants in the Room) would be to have students take examinations at the beginning and end of the school year, and measure improvement. One problem with this is that if the schools run the beginning of the year exam, they’re incentivized to encourage their students to do badly. But perhaps there could be some central administration of the beginning of the year exam.

    • Troy says:

      I should also note that rewarding private schools which can choose who to admit for test performance incentivizes exclusion of those children in the most need of help. Public schools right now have to do what they can for these students; private schools would be under no such obligation.

      • Tracy W says:

        But there are only a limited number of children, and thus a limited number of children who aren’t in the most need of help. Once the first round of private schools has grabbed the most teachable kids, the next market opportunity is to teach the less teachable kids.

        It’s why markets provide niche services. Yes, Netflix might make less money from Orange is the New Black rather than broadcasting the football World Cup, but if Sky won the bidding for the broadcast rights for the football World Cup, then going for the smaller market can be the profit-maximising response.

      • FJ says:

        Which is why states that use voucher programs prohibit cream-skimming.

        • Troy says:

          And like most government regulations, there are probably ways around this — e.g., admissible criteria which correlate with intellectual aptitude, locating the school in a place with fewer low-IQ children, selective advertising, etc.

    • Two points:

      1. The requirement I proposed was a pretty low one, so unless a school admits almost exclusively low IQ kids it should be able to meet it, given reasonably competent instruction. Hence it doesn’t provide much of an incentive to try to admit only smart kids. Your objections seems more relevant to rating schools by test performance, which was not my proposal.

      2. I offered a solution to the problem you point out in the context of rating law schools in a blog post that you might find of interest.

      http://daviddfriedman.blogspot.com/2008/02/law-school-accreditation-and-bar.html

      • Troy says:

        Thanks for the response. Re, 2., I’m very sympathetic to your proposal there (having the LSAT as a pre-existing measure of initial legal ability is convenient in that context). Re, 1., I agree that a cut-off isn’t as bad as rating by performance. But some schools may indeed admit “almost exclusively [comparatively] low IQ kids” — e.g., schools in an almost exclusively lower-class black area. I don’t have numbers immediately available, but I would bet that in New York, for instance, nearly every school with almost exclusively poor black students would score in the bottom third of the state’s public schools, even if they were actually doing better than most other schools with those demographics.

        • I expect my seeing that as a nonissue in part reflects my guess that a competently run private school will do considerably better with students from a poor area than the sort of public school such students are likely to experience.

    • cassander says:

      >would be to have students take examinations at the beginning and end of the school year, and measure improvement

      This is standard practice in Texas, students take exams every year, and the value added is measured.

      • Jiro says:

        That just shifts the problem around a bit. If you measure success by how well the students do, that gives low marks to schools with a lot of students who started out low and were still low even though they improved a lot. But if you measure success by amount of improvement, you now face the opposite problem: that gives low marks to schools with a lot of students who started so high that they can’t improve much.

        Even if you used some sort of weighted combination of absolute skill and improvement, different students have different tendencies towards each one and there’s going to be a specific student profile that is most advantageous for the school’s assessment. You’re not actually going to gen an assessment that is independent of student quality.

  24. Jonathan Paulson says:

    Holy !@#$, I think he has solved the problem of urban mass transit.

    I don’t. Stopping to negotiate with every hopeful commuter (“are we going in the same direction”? “how much will I pay you”?) would really slow down traffic.

    As a commuter: do I just take a ride with every person whose headed closer to my destination? How many rides will it take for me to get to work? I don’t want to have to negotiate my commute every day; it sounds stressful and high-variability.

    The fact that subways and buses hold dozens or hundreds of people and have fixed schedules are both huge advantages.

    Finally: why aren’t people doing this if it’s such a great idea? It’s not illegal right now.

    • coyotespike says:

      I agree with your whole analysis: stress, high variability, and delays are entirely sufficient reasons why this hasn’t evolved before now. I’d only point out that just as Uber and Lyft reduced the friction for individuals to offer rides to other individuals, another startup could do the same for multiperson commutes. In other words, this sounds like a (potentially) viable business plan.

      Suppose you just fill out your profile – I usually head to work about this time, on this route – and say you’re willing to accept up to 2 passengers at the usual rate (whatever that may be). Just as with Uber and Lyft, your passengers pay through the app. On the other side, if you’re looking for a ride, you just look for one of the half-dozen rides in your area heading out about when you want to. (This would work better if you have a backup, clearly).

      Given Uber/Lyft’s ongoing battles (and the fact they are now participating in writing new regulations which – surprise! – favor them), legality would be questionable.

    • Nicholas says:

      Hitchhiking is explicitly illegal in six American states, and limited by law in most others if it is free. It is limited in almost all American states to give people rides for money to those with Chauffeur’s licenses.
      Beyond that, most Americans believe something along the lines of “The odds of a hitchhiker being a murderer or their are high enough that I should never give one a ride.”

    • Tracy W says:

      On the other hand, buses tend to be awfully slow what with stopping and starting all the time. If it takes 2 hours to get to your destination by bus, and 40 minutes direct by car (figures from the last Google map route search I did), and it takes you twenty minutes to negotiate a ride, you’ve saved an hour of your time. And it’s not like the time a bus takes is that fixed anyway.

      Subways are great but have very high fixed costs and are subject to strikes.

  25. John Schilling says:

    Even David Friedman estimates [private space travel] more like twice as efficient

    David Friedman’s words were “at least twice”. From my own experience in the aerospace industry, the actual cost multiplier is roughly a factor of five. See e.g. SpaceX vs. ULA, or the Northrop F-20 vs the (now) Lockheed-Martin F-16. The issue is somewhat complicated by the fact that much of the extra cost goes to extra features demanded by the government, making a perfect apples-to-apples comparison nearly impossible.

    • I expect NASA is much less efficient today than in 1969. In 1969 NASA jobs were high status, with employees motivated partly by the desire to show that the US was more competent than a serious enemy. Many could get good jobs elsewhere when NASA’s biggest mission was done. I suspect NASA today is much more dominated by career bureaucrats focused on job security.

      OTOH, why should we believe that $50 billion government estimate?

      That’s related to why a Mars landing today would get nowhere near 400 million viewers. A race between SpaceX and some hypothetical competing company is dramatically less important than a race between superpowers who might fight a war soon. Plus the internet today provides more options for what to watch than the 3 TV channels a typical person in the US in 1969 chose from.

  26. The average cost of treatment for a heart attack is about $15,000. The poverty line for a single person in the US is $11,000. On the one hand, credit cards and loans can make up some of the difference; on the other, heart attacks are by no means even close to the most expensive medical condition. So if we’re talking about actually buying health care then no, the poor literally cannot afford it.

    Isn’t the state of medicine in America quite similar, if not worse than, the situation with the Civil Aeronautics Board? Onerous regulation, excessive credentialization, and an artificial limitation of medical professionals all inflate prices significantly.

  27. 27chaos says:

    I’m not sure the jitney idea is as good as you’re making it out to be. If it would work, why aren’t commuters already doing it privately?

    One reason is that there are concerns about trust involved. In one sense, this involves things such as how hitchhiking is considered dangerous because of an occasional murder. But also, what happens if the driver gets to the stop and the passenger refuses to pay? Would the driver have a set fee they charge each customer, or would they haggle? How do you go about filing a complaint to the company or government to report a driver if they do something illegal or inappropriate? The first paragraph of Friedman’s you quoted is good, but one important factor not mentioned by it is that without some form of trust (“love”) or force involved, successful trade will not usually occur.

    A second reason this isn’t happening already is that there are coordination difficulties which would slow things down. What happens if the driver wants to go three blocks north and then two blocks west, but the passenger wants to go two blocks north and then one block east? How do passengers know whether or not someone is participating in this program as a driver? These factors would all slow the system down, as would the simple fact that drivers who go straight from point A to point B will result in less congestion (on average) than drivers who make detours or take frequent stops along the way. If you simply move a traffic jam from the streets themselves to the jitney stops, you’re not actually speeding up transportation.

    The college idea I like much better. It practically has me salivating at the mouth. Unfortunately, I don’t see any incentives outlined which would encourage universities to create or participate in programs such as this, or to accept the “borrowed” classes as legitimate credit at their institution. Even if the faculty might want this, the people writing them paychecks would not. The actual incentivized action is for universities to encourage people to take borrowed classes while denying that the classes count towards a degree – and in fact, this is essentially how study abroad offers work.

    • Tracy W says:

      It works in Chiang Mai. There’s a system of trucks driving around, you hop on, you pay your money, you get to where you want to go, you hop off. I’ve done it, without even speaking the local language beyond hello and good-bye. Obviously if I refused to trust anyone I wouldn’t have done it. But if I refused to trust anyone, well, judging by my grandmother, I’d have a pretty darn miserable life.

      And of course, if people are sharing cars, as opposed to all taking their own, then the total traffic falls, speeding things up.

  28. Ano says:

    http://www.seattletimes.com/nation-world/south-africas-taxi-wars-taking-toll/

    Obviously South Africa is a pretty extreme vision of taxi deregulation and I doubt taxi deregulation would lead to cartel wars in a western nation. But I don’t think taxi deregulation is a low-hanging fruit; it’s strongly debatable whether it has an overall positive effect and it’s effect seems to depend on the specific conditions.

    Also, the reason Uber works so well is because it breaks down barriers to communication between drivers and passengers, making it easier for drivers and passengers to signal to each other. Jitney is fine, but in practice I think it would need some kind of way for drivers to signal their direction to passengers, and vice-versa, without having to pull over and talk to them. That didn’t exist in 1973, but it does now.

    • Andy says:

      I have friends who live in the Philippines who use something called a “Jeepney,” essentially a privately-owned Jeep jitney, to get around. Generally as I understand it the jeepney’s route is painted on it.

  29. Conrad Hughes says:

    Re: “urban renewal”, the impression I get (not my area, but I’m interested) is that there’s a liberal tendency to spin it positively, but ultimately, yes, it is an expression of violence against the poor. Witness this academic’s response to a Guardian (supposedly left-wing UK newspaper) article in praise of gentrification:

    http://www.newleftproject.org/index.php/site/article_comments/there_is_nothing_natural_about_gentrification

    .. however, you don’t need a government to do gentrification, so I don’t see this perspective supporting a libertarian approach either.

    In the UK/EU, government actually tries to prevent this kind of thing driving the poor entirely out of cities (since the rich still need someone to clean and cook for them) by requiring new housing to mix rich and poor – however, recently this has produced buildings with two doors: one for the rich residents, and one for the poor. A certain amount of public disgust has ensued, but I’ve no idea what consequence that will have, if any.

    (Actually, searching for “poor door”, I see exactly the same thing is happening in the USA)

    • cassander says:

      If the rich drive the poor out of the cities, then either they’ll have to pay their servants more (to commute, to be able to afford the cities), or do without servants. the sort of mixed use facility you talk about is just the state subsidizing the lifestyle of the rich under the excuse of helping the poor at the expense of those in the middle.

      • Conrad Hughes says:

        To some extent, yes. I don’t know which works out better in the long run, but I note that in the two countries I’ve lived in, new public transport is rarely built to serve anyone but the well-off, so the “they’ll just have to commute” approach needs more work or it will aggravate the temporal and financial divide. The rich buying up everywhere nice and the poor being pushed to the margins won’t lead anywhere good, and all I was saying above is that academia appears to have grokked this even if our media still participate in the delusion that it’s all fine and dandy.

        • cassander says:

          >new public transport is rarely built to serve anyone but the well-off,

          this is ‘murca, 3/4s of the poor people have cars, and the 1/4 that don’t are overwhelmingly either immigrants or residents of New York.

          > The rich buying up everywhere nice and the poor being pushed to the margins

          where do you think the rich and poor live now?

      • It’s also about subsidizing the poor, since they would have access to better jobs, the ability to maintain relationships with their extended families.

  30. coyotespike says:

    1. Sad to see Mars One is probably a scam! I liked the idea.

    2. “So many books I need to read before I can have opinions on things.” One of the things Machinery of Freedom (Friedman?) highlighted for me is the importance of history as data. I mean, robber barons and monopolies were an unquestioned assumption of my economic knowledge, so Kolko’s critique of that historical narrative opened up new possibilities. If monopolies cannot really “survive in the wild,” and in fact monopoly regulation is just another example of regulatory capture, then there goes another basis for governmental intervention! But I also need to know more before I can reach any such conclusion.

    3. Finally, the argument that we need the FDA to limit tort recovery – and thereby protect our vaccines – strikes me as weak, at best. If we were approaching tort reform from scratch, would you really propose the FDA as a solution? Or might we instead institute a more targeted solution – say, a loser-pays system like the UK’s and caps on recovery?

    • maxikov says:

      It has been quite obviously a scam right from the beginning, and this is not hindsight – people knowledgeable about space industry were saying that all the time. Interplanetary flights are no easy task, and it’s not because of the orbital mechanics, a large portion of which you can understand on a decent level even after playing KSP, but because space is very hostile to electronics and systems is general. CubeSats have 22 pages of technical requirements that you have to comply with just to make sure that your satellite doesn’t screw up the rest of the rocket’s payload. They have nothing to do with the success of your own mission – that’d require hundreds more pages. And this is just for a short-lived tiny uncontrolled LEO (read: negligible communication delay, you can even kinda work with an omnidirectional antenna, and it’s still shielded by the Earth’s magnetosphere) satellite. Interplanetary missions, even unmanned, where you don’t have to care about life support, are orders of magnitude harder. Russia tried to get an unmanned probe to Phobos (which is easier than Mars itself, since no reentry and soft landing system is needed – the gravity of Phobos is weak enough for it to be more of a rendezvous than landing) in 2011, and failed spectacularly right on the LEO, despite all their experience and access to classified engineering data.

      And then some guy says “hey, we’ll raise some money from a TV show, and get humans to Mars.” Why would anyone believe such an extraordinary claim without appropriately extraordinary evidence? A space agency has to at least launch a lunar orbiter before it’s warranted to seriously consider any of their claims about interplanetary missions. And if they want to land – land something there too, since in many aspects lunar landings are much easier than Mars landings (on the Moon you’d have to cancel all of the velocity with retrorockets, while on Mars you can use parachutes, but on the other hand it’s atmosphere isn’t thick enough to land without retrorockets at all, but is thick enough to create problems with reentry, with the wind interfering with powered descent, and with dust particles flying around in clouds rather than falling down right away like on the Moon).

  31. maxikov says:

    The idea about public transit is definitely won’t work for subway systems – the entrance cost is just way too high. And this is not something you can really do incrementally – the attractiveness of a subway system is a function of the number of places you can get by it, so the ridership grows faster than linearly with the number of stations. This also means that small subway systems (or large, but with a small number of stations, with BART being a perfect example) are far less sustainable than large ones. Thus, to be efficient, it requires a huge initial investment, which I’m dubious can be raised by any entity other than the government or a very large corporation. Now, whether it’s possible to have successful public transit infrastructure without a subway, I’m not sure. Anecdotally, every city where I felt entirely comfortable getting around without a car is hugely subway-oriented: NYC, Seoul, Busan, Moscow. In SF Bay Area including San Francisco itself I prefer to drive despite the traffic jams, parking issues, and the availability of BART and Muni. However, I’ve never been to Curitiba or Bogotá – maybe their BRTs are indeed just as efficient as subways at a fraction of the cost, I don’t know.

    For-profit space exploration is my big dream, but I have to say that SpaceX only kinda qualifies. First, it indeed only exists because Elon Musk doesn’t care whether this is the most profitable or profitable at all thing to do – he just wants to fly to Mars, and doesn’t want to wait decades before the government raises enough money to do it. Second, most of their revenue directly or indirectly comes from the government. If they managed to make all of their money by launching private communication satellites, there would be something to talk about here. Although large portions of comsat industry are also intertwined with the government, that would still be a much more convincing argument for private space exploration than being a contractor for NASA’s non-profit tax-funded ISS missions.

    • Anon256 says:

      The subway systems in Tokyo and London were built mostly by private companies, as were the PATH subway in New York and the elevated lines in Chicago, and most of the mainline railways in the world. In Japan this continues to the present day; Tokyo Metro completed the Fukutoshin line in 2008, and JR Central is planing to build a $75 billion intercity maglev line with their own private capital. In practice it seems the barrier to entry is not too high for private companies when the regulatory environment is amenable to them. (For most of the 20th century in the US the political environment was actively hostile to private transit companies, both by subsidising competing roads and low-density development and by imposing onerous fare and labour regulations and taxes on the companies, who were often vilified as “traction monopolists”. This ultimately led to the bankruptcy and government takeover of nearly all private transit operators in the US.)

      BRT is usually only cheaper than rail if somebody else already paid for the road, which shouldn’t be assumed in a libertarian context.

      The bigger problem with transportation in a libertarian system is the difficulty of acquiring the necessary land in a straight line. Private railway companies everywhere in the world were delegated government eminent domain/compulsory purchase power in order to acquire efficient routes. Otherwise it’s just too easy for one irrational holdout to block the whole line (and if you don’t solve the coordination problem even the rational property owners have an incentive to hold out). Of course this is also an issue for road and to some extent other infrastructure projects.

      • maxikov says:

        I tried to look up the examples you provided, and although they indeed weren’t directly built by the government, what I can see so far implies its heavy involvement in many cases.

        http://en.wikipedia.org/wiki/Tokyo_subway -> “Formerly the Teito Rapid Transit Authority (TRTA), it was privatized in 2004”

        http://en.wikipedia.org/wiki/London_Underground -> “The private companies that owned and ran the railways were merged in 1933 to form the London Passenger Transport Board. The current operator, London Underground Limited (LUL), is a wholly owned subsidiary of Transport for London (TfL), the statutory corporation responsible for most elements of the transport network in Greater London”

        http://en.wikipedia.org/wiki/PATH_(rail_system) -> “It is operated by the Port Authority of New York and New Jersey” -> http://en.wikipedia.org/wiki/Port_Authority_of_New_York_and_New_Jersey -> “The Port Authority of New York and New Jersey (PANYNJ) is a joint venture between the States of New York and New Jersey and authorized by the US Congress”

        http://en.wikipedia.org/wiki/Chicago_'L‘ -> “It is operated by the Chicago Transit Authority” -> http://en.wikipedia.org/wiki/Chicago_Transit_Authority -> “The CTA is an Illinois independent governmental agency[2] that started operations on October 1, 1947 upon the purchase and combination of the transportation assets of the Chicago Rapid Transit Company and the Chicago Surface Lines streetcar system” -> http://en.wikipedia.org/wiki/Chicago_Rapid_Transit_Company -> “The CRT network was entirely at or above grade level until the 1943 opening of the State Street subway, now part of CTA’s Red Line. Following World War II and the continuing financial malaise of the privately owned bus, streetcar and elevated/subway operators, both the city government of Chicago and the Illinois legislature favored consolidating the three separate systems into a single, public-owned authority”

        Then I also checked some of the successful mainline railways:

        http://en.wikipedia.org/wiki/Korail -> “State-owned enterprise”

        http://en.wikipedia.org/wiki/SNCF -> “France’s national state-owned railway company”

        http://en.wikipedia.org/wiki/Rail_transport_in_Germany -> “railway network of 41,315 km of which 34,211 km belonged to the national railway”

        http://en.wikipedia.org/wiki/Canadian_National_Railway -> “CN was government-owned, having been a Canadian Crown corporation from its founding to its privatization in 1995”

        Needless to say that nearly everything in Russia and China is government-owned, and they even inherited a lot of the infrastructure built by the actual Communists.

        JR, which appears to not be in a committed relationship with the government, seems more of an exception in this list.

        As for land acquisition, I suppose deep underground lines can solve that. If your model of land ownership is “something that you can realistically claim and use”, a line 100 meters underground hardly violates it.

    • chaosmage says:

      > only exists because Elon Musk doesn’t care whether this is the most profitable or profitable at all thing to do – he just wants to fly to Mars

      I disagree. The Mars story serves at least one entirely economical purpose: It attracts the best aerospace talent, and creates such a long waiting list that any employee not willing to work 60+ hours weeks can be credibly threatened with dismissal. In that particular market, where engineering talent is the key scarce resource, any rational CEO who simply wants to predate on inefficiencies in the launch market should act exactly like that.

      I’m not saying Elon Musk is being dishonest about wanting to go to Mars – personally, I believe him. But I don’t think I know. When they have that big Mars rocket ready, we’ll see if they’re simply selling it to NASA so NASA can send bigger rovers or whatever, or whether they’re actually going to invest in building up a transport fleet that remains their own property/risk. That’s when I’ll be sure about Musk’s order of priorites, not before.

      In the meantime, they’re getting into the satellite production business, predating on inefficiencies there, growing that market and creating their own launch demand for the post-ISS years. Again, makes perfect sense from a business perspective. And again they’re talking about how their global satellite telecommunications network is a test case for the one they’ll build around Mars – although the Mars one can’t need even one % of the Earth one’s bandwidth. Doesn’t that sound like they have a policy of making every profitable thing they do sound related to the Mars story?

  32. Rob McMillin says:

    Re PSA and major intrastate air routes, I’m kind of surprised to see the author fail to mention Southwest Airlines, which got its start servicing intrastate markets in Texas.

  33. Rob McMillin says:

    I worry that very big high-risk projects are exactly the sort of thing our current market system is really bad at.

    Well, not necessarily, but what we have is not a “market” system so much as an enormous tower of government regulation posing as a market. That was the way Californians were sold electricity “deregulation”.

  34. cassander says:

    >The best answer I’ve ever heard to the question of how to decide who gets school vouchers.

    On vouchers, how is there a question? Just give everyone a voucher. Take the existing education budget of any state or school district, spend a couple years to transition to directing that budget through the students rather than the existing system, but preserving all the other rules of that system. Once that works, spend a few more converting those public schools into independent private schools. Boom, you’re done. whole thing takes maybe 5 years, 10 tops.

    • Alex Richard says:

      The question is not which students get vouchers, the question is which schools will be allowed to receive vouchers. i.e. what ensures that students are actually receiving an education.

      (Historically, it seems like universal education isn’t a natural state for people; if we just give people unrestricted money, why would you expect this to result in them getting an education?)

      (Under your proposal, are you really going to ban home-schooling and new schools?)

  35. It occurs to me that I ought to mention, for the benefit of people who find my writing interesting either because they agree with it or because they don’t (or for other reasons), two other places to find it:

    http://www.daviddfriedman.com (my web page)

    http://daviddfriedman.blogspot.com/ (My blog.)

    Also, a common criticism of my two novels is that the characters are unreasonably rational. It is possible that some here might find that a virtue rather than a fault.

  36. Z.Frank says:

    I fell in love with David Friedman from the descriptions of his ideas present in Steven Landsburg’s books, most notably the “Iowa Car Crop” illustration.

    http://www.walkerd.people.cofc.edu/Readings/Trade/iowacarcrop.pdf

    Friedman didn’t write the words in the short article above (Landsburg is paraphrasing him), but I think it is fair to say his “rhetorical brilliance” comes out in that article.

  37. verwischt says:

    Basically what I see here, and usually encounter when talking to liberatrians is the following: They take a small subset of our society as it is and show the theoretical superiority of some pure free market paradigm in this specific subset.
    This is fine, as long as they confine the reasoning to this specific subset and at least try to assess the repercussions of this change for society as a whole. But this is something I never encountered. It’s all in micro-economic terms. This kind of thinking leads to thought experiments like this:

    Those assets—the net working capital of all corporations in the United States in 1965—totalled $171.7 billion. The workers could buy that much and go into business for themselves with 14 months’ worth of savings.

    This is, not even in the most benign setup, even in a pure theoretical sense, how thing’s could possibly go down.

    If workers would try to to save 14 months worth of savings, even over a period much longer than two and a half years, the economy would be devastated long before they would be halfway done with this endeavor.

    Where would the savings those workers accumulate go? How would the companies compensate for the aggregate loss in spending power? How would they pay their workers who are just secretely planning to buy up the company paying them (by saving their money in the bank which uses it to invest somewhere, driving up stock prices)?

    Making this argument is pure randomness. It is like saying something like: ‘scientists assess the net worth of all goods and services provided by nature to be 5 quadrillion dollar/year. Therefore nature could easily conquer humanity’.

    • Samuel Skinner says:

      There is a noticeable flaw in your argument- different countries have different savings rates (Japan had a 25% savings rate in the 1970s during their development). Saving money does not destroy the economy. In fact if money is immediately spent on stock it doesn’t leave circulation- it is simply a wealth transfer. The economy has to readjust and a lot more luxury yachts get built, but it doesn’t cause a long term depression.

      Finally you are assuming a worker hive mind. If it is staggered or not everyone wants to buy up a corporation you get a situation with minimal disruption. Its a bit like complaining that not everyone can get product x because the stores can’t service every single person in the country on one day.

  38. Anon256 says:

    Two major issues with the jitney thing:
    1) One of the main points of private cars is that people generally aren’t going the same way. I’ve hitchhiked a lot and am always amazed how people who pick me up are going every which way and hardly ever continuing in the direction I want to go for very long.
    2) 2-4 people in a car is still a much less efficient use of space than buses and trains. There’s not room for all those cars in dense city centres, or on the roads leading to them.

    Of course, since this is a libertarian proposal, the roads would be privatised and tolled, so few people would spend the money to drive into the city even if they could split the toll. Privately-run bus and rail services would become popular and profitable, as they were before the government started subsidising and overbuilding roads, and still are in places like Tokyo (and the Lincoln Tunnel). Uber/Lyft would be a lot more expensive and less popular if they actually had to pay for their road usage.

    I’m really confused that Friedman would suggest such an inefficient and inadequate system rather than looking at how transport works in rich cities where government is less involved in it (both elsewhere in the world and historically). Had he never been to a real city?

    • Tracy W says:

      2) 2-4 people in a car is still a much less efficient use of space than buses and trains. There’s not room for all those cars in dense city centres, or on the roads leading to them.

      Yes, but even in Europe there’s an awful lot of work places that aren’t in city centres. For example, the nearest hospital to me in London was once on Hyde Park, but moved out to the suburbs to get more space. Germany has hordes of cute little villages with a factory attached. Etc.
      And if there’s no room for all those cars in dense city centres, then the road tolls will rise, so people will have a natural incentive to go into space-saving buses instead.

  39. tom says:

    “The average cost of treatment for a heart attack is about $15,000. The poverty line for a single person in the US is $11,000. ”

    At which $11,000 and somewhat higher still you are eligible for Medicaid which as far as patient costs go is superior to many many insurance alternatives available on the market. I leave as an exercise to the reader figuring out the incentives created by the regulation which makes you lose the eligibility and coverage completely (as opposed to gradually) once your income passes certain threshold.

  40. Harald K says:

    “Under any institutions, there are essentially only three ways that I can get another person to help me achieve my ends: love, trade, and force.”

    In a book by Nicolaus Tideman, “Collective Decisions and Voting: The Potential for Public Choice”, he had a nice schema for these things with “compensation” on one side, and “fairness”, whether both parties find it fair, on the other.

    Fairness with no need for compensation, that’s consensus. Unfairness with no compensation is “pseudo-consensus”, where one party wants something else, but goes along with the other(s) anyway. This could be love, but it could be other concerns too, as long as there’s no demand of compensation.

    If there compensation and both agree it’s fair, that’s trade. If there is compensation but unfairness, that’s extortion (“You give me your money, In return I won’t hurt you.”)

  41. ” I understand that this book’s proposals include a large package of reforms which include those to the court system. But Friedman’s worries about how any “limited government” will eventually regrow into the kind of government that says you feeding your own grain to your own pigs is interstate commerce, are matched by my worries about how any “reformed court system” will eventually regrow into the kind of court system where children must be banned from sledding because if they get hurt they can sue the city for not having banned sledding, or lots of people who come to a psych hospital have to be committed lest years later somebody sue the hospital for not committing them.”

    Can someone explain why these oribkrns get summarized as “too much government” rather than “too.much litigation”

  42. Zoltan Berrigomo says:

    On the subject of the poor and health care: I’d suggest that a world while a world without any government intervention in health care would be disastrous for the poor in the short run, it would be a massive improvement for them in the long run.

    The reason is that health care is getting more and more expensive with time, a corollary of the separation between the people who decide when it is to be bought (patients, doctors) and the people who pay for it (governments, government-regulated insurances). The incentives for innovation are therefore NOT to invent cheaper health care; they are to invent treatments that work a little better and cost a lot more.

    I hardly need to say that innovation is responsible for the modern world, etc etc. Getting that on the side of the poor would be a massive boon for them in the long run.

  43. Beowolff says:

    It probably says something very important about human nature and politics that the Socialist movement isn’t dominated by the project of doing exactly this.

    Who is to say that this isn’t happening already? The largest mutual fund company in the world is Vanguard, a client owned firm whose mission is to provide low-cost investment solutions. Vanguard’s most famous product is the index fund, which is an investment fund that seeks to emulate the performance of an index of a specific financial market. For example, the Vanguard’s 500 Index is the a mutual fund that only invests in the S&P 500 stocks in proportion to the value of each stock. Index funds are cheap to run because you don’t need lots of highly paid analysts and portfolio managers, just a few traders to buy/sell the amounts of stock needed each day to keep pace with what the market is doing.

    Vanguard’s name recalls the idea of the Leninist “Vanguard of the Revolution”, its colors are red and white (Socialist colors), and its ownership structure is designed so that all excess profits of the firm are returned to clients, much like a co-op or credit union.

    For the downtrodden members of the proletariat, Vanguard allows you to open an account with nothing, and the most inexpensive ETFs cost around $100 a share. Never before has becoming a capitalist been so cheap!

    /joking

    I made this post in jest, but one could definitely made a convincing hypothesis that Vanguard is a secret socialist project and it’s founder, John Bogle, one of the most successful American crypto-socialists ever.

    • PGD says:

      1) A bit less than half of American families own stock of any kind, including index funds

      2) the great majority of those that do own stock own a relatively small amount — don’t have the numbers handy now but they are in the Fed Survey of Consumer Finances.

      2) index fund holdings are a terrible mechanism for affecting corporate behavior

      • Beowolff says:

        1) Well that’s because the proletariat aren’t saving enough! If the working class were to save enough of their income, then they could seize the means of production /sarcasm.

        2) Mostly because Vanguard, the most likely candidate, has been very shy about influencing proxy battles; mostly I think because John Bogle and Jack Brennan, the last two CEOs, are at their core very conservative businessmen. This didn’t necessarily have to be the case. I can certainly imagine a counterfactual scenario where a large index provider could throw its weight around especially if it was imbued with a particular mission.

        Just the other day I read this article in the WSJ, which talked about how Vanguard and BlackRock, another large asset manager, have become more aggressive in recent years. Link

        As another datapoint, I have a friend who works for Vanguard helping decide proxy votes for the funds. He’s said in the past two years, Vanguard has become a lot more aggressive in talking with company’s management.

        While I agree it’s improbable, it’s not impossible.

  44. PGD says:

    It probably says something very important about human nature and politics that the Socialist movement isn’t dominated by the project of doing exactly this [buying up publicly traded companies]

    Argh. I have been kind of surprised by the way that Scott’s otherwise formidable critical powers get softened when it comes to libertarian pie-in-the-sky ideas, but usually he at least gently points out the nuttiest parts. But apparently not for this proposal that everyone in the country should just give up half their income in order to socialize production.

    Obviously if one had the power to convince every single worker in the US to ‘live like a hippie’ for a period of multiple years then all kinds of social changes could happen. But absent a centralized mechanism for either coercion or at least coordination of all workers that is unlikely to happen. Instituting socialism is a public good, one’s own contribution is miniscule in the aggregate even if enormous at the personal level, etc. And BTW U.S. labor laws are rigged to ensure that even rather gentle means of coordination / coercion (like large-scale unionization and devoting union dues to gaining ownership stakes) are out of bounds.

    This is not even getting to other fundamental flaws in the proposal, like the fact that stock is sold in a free market and when a huge amount of money floods into a market the assets in it (in this case corporate shares) generally go way up in price. The main effect of this proposal would be to make current stockholders even richer than they are.

    BTW, what unions we have do have some ownership of corporate stock through pension funds, but they are legally restricted (by fiduciary duty requirements) from using those ownership stakes to actually impact the behavior of corporations in any meaningful way. Not that it would be easy to do so regardless — joint stock corporations may be more democratic than privately held entities but they are still not very democratic.

    Anyway, this proposal is actually considerably less sensible than other libertarian chestnuts like ‘let’s eliminate poverty through private charity!’ — which is saying something.

    • briancpotter says:

      If socialists are unable to solve the coordination problem of buying up private companies, isn’t that pretty good evidence they wouldn’t be able to solve the coordination problems of running an entire economy?

      • PGD says:

        You need a government to solve the coordination and coercion problems of running an entire economy. The reason Friedman raises this strange idea at all is that it’s supposed to be a way of achieving socialism, without, you know, revolution — or taking control of the government away from the capitalists* and giving it to the socialists.

        * as you may have noticed capitalists use the government to enforce the property rights the capitalist system depends on. In the real world no capitalists have ever succeeded in implementing capitalism at scale without using government to solve the coordination and coercion issues.

    • Samuel Skinner says:

      “But absent a centralized mechanism for either coercion or at least coordination of all workers that is unlikely to happen.”

      Why? Do they have to do everything simultaneously? Can’t they just focus on a few firms, succeed and use that success to inspire others and show the plan works?

      “Instituting socialism is a public good, one’s own contribution is miniscule in the aggregate even if enormous at the personal level, etc. ”

      Worker ownership is supposed to be good in and of itself for socialists so the scale we are talking about is an individual firm.

      “This is not even getting to other fundamental flaws in the proposal, like the fact that stock is sold in a free market and when a huge amount of money floods into a market the assets in it (in this case corporate shares) generally go way up in price.”

      So don’t have workers buy up all the firms at the same time? It isn’t like there is an infinite number of socialist organizers anyway.

      brian
      “If socialists are unable to solve the coordination problem of buying up private companies, isn’t that pretty good evidence they wouldn’t be able to solve the coordination problems of running an entire economy?”

      Different problems. You really can get workers to buy companies and go into business themselves (See New Era Windows). I don’t think this is a coordination problem; getting people to sign a contract pledging the necessary funds isn’t unimaginable. It’s just that people don’t want to do it- they would rather have the money than own their firm.

      • PGD says:

        This is a fair comment but proves far less than you seem to think it does. Socialism and capitalism are *systems*. If you change ownership of a single firm without changing the system you have just won the ability to have one worker-owned firm competing on capitalist terms within the capitalist system. That is something different than a more socialist system. Arguments about socialism are not really based on the superiority of workers as managers but on the more humane nature of a system that modifies or removes profit incentives.

        With that said, one could imagine a gradualist bottom-up transition to socialism, but the problem is that any such bottom-up change is dependent on coordination between many many people who individually do not have large amounts of resources (that’s what it means not to be the ruling class). You would need institutions that make such coordination possible and realistic on a large scale. Unions could do it but it is enormously difficult to organize and maintain unions in the US…I do think that if labor laws were different more people would join them.

        P.S. I may not even be a ‘socialist’ whatever that means — I think the most successful industrial and modern economies have all been mixed economies — but I’m certainly not a libertarian.

        • Samuel Skinner says:

          “If you change ownership of a single firm without changing the system you have just won the ability to have one worker-owned firm competing on capitalist terms within the capitalist system. That is something different than a more socialist system. Arguments about socialism are not really based on the superiority of workers as managers but on the more humane nature of a system that modifies or removes profit incentives.”

          It depends on what flavor of socialism we are talking about. Eliminating the market and price mechanism isn’t possible through anything short of violent revolution. However, market socialism is possible following this method. Given that more modern socialists focus on fairness and no longer believe planned economies are the most efficient way to run things, they should be more in favor of this path than they were in the 1970s.

          “but the problem is that any such bottom-up change is dependent on coordination between many many people who individually do not have large amounts of resources ”

          Only if you goal is to buy up the entire economy at once. Its perfectly possible to slowly build up- Mondragon has 74,000 workers in its individual cooperatives (wiki lists 257).

  45. FWIW, New Zealand has successfully kept medical lawsuits from being an issue since 1974. OTOH, we used a socialist approach rather than a libertarian one. 🙂

  46. social justice warlock says:

    It probably says something very important about human nature and politics that the Socialist movement isn’t dominated by the project of doing exactly this.

    In addition to the reasons noted above, note that

    1) workers aren’t homogenous, some of them earn much more than others. If every workers starts living at hippie conditions (a good number of which already are, especially internationally) and forwarding their money into investment, you’ll still have a very skewed ratio of ownership. But more importantly
    2) even if we had a perfect one-time redistribution of capital, it couldn’t last, because some firms will succeed in the market and others will fail, meaning some have capital and others don’t.

    This is why socialists, of necessity, are advocates of an alternative economic system of some kind, rather than dispensers of retirement advice. (Qua socialists, anyway. I’m sure there are some socialists who dispense retirement advice as well.)

    • Samuel Skinner says:

      ” workers aren’t homogenous, some of them earn much more than others. If every workers starts living at hippie conditions (a good number of which already are, especially internationally) and forwarding their money into investment, you’ll still have a very skewed ratio of ownership. But more importantly

      even if we had a perfect one-time redistribution of capital, it couldn’t last, because some firms will succeed in the market and others will fail, meaning some have capital and others don’t. ”

      Er, that would just imply that only part of the economy could easily be worker owned. Given that socialists consider worker ownership good, not just a stepping stone to the revolution, they should be willing to work towards this.

      • social justice warlock says:

        I mean, there are socialists doing that – I would wager most cooperatives I have encountered and proclaimed that they were cooperatives have an ideological agenda – just as there are socialists tailing all sorts of non-revolutionary political things (and pursuing all sorts of goods that have no relationship to politics, like fixing up cars or caring for their dying mothers or whatever.) But you see why this isn’t a socialist strategy as such.

        • Samuel Skinner says:

          Cooperatives and syndicalists are focused on this, but his point was mainstream socialists should to. One of the main complaints of socialists are fairness and worker ownership solves this.

          It also solves the issue of how we transition to socialism- once we have enough companies owned by worker’s you’ve broken the ability of the capitalist class to control the economy.

          This is important because other socialist politics do not solve this issue. You can 1 create a socialist party, 2 get it into politics, 3 hold it together 4 get it into power and then 5 enact its program… only for the program to be broken or repealed. Notably there isn’t feedback to keep everyone on the path of socialism so it can easily derail- like say the British Labor Party becoming neoliberal.

          Tldr- enacting sweeping AND lasting change through the political system is incredibly hard.

  47. hawkice says:

    Worth noting that, in his solution for public transport, he either omits or predates people trying it (largely). Jeepneys are… not quite tuned to my American tastes, but basically work this way, and are (as far as I ever saw), all privately owned. Only complaint is that they were, at moments, tremendously cramped (imagine fitting 15 or more people into a car notably smaller than an SUV).

    • “I’m also skeptical how you would even go about to measure progress in completely different scientific fields.”

      My memory of Kealey’s talk is that he looked at several cases where government support of a field when from near zero to very generous in a short period of time, and didn’t find any corresponding increase in rate of progress. But it’s a talk I heard many years ago, so I don’t swear I have the details correct.

    • “Worth noting that, in his solution for public transport, he either omits or predates people trying it ”

      Have you read the chapter? If not, how can you know what I omit?

      The chapter discusses the original Jitneys, mentions their existence elsewhere in the world, and references the classic article by Eckert and Hilton which describes, among other things, how they were legislated out of existence in the U.S.

  48. Michael Powell says:

    It seems utopian panacea problem-solving is like newspaper reporting: they seem to get most things right most of the time, unless you know anything at all about the subject, at which point they tend to be dangerously wrong about everything.

    Also: NASA’s level of trade efficiency is buoyed by the fact that they get a lot from the love axis as well.

  49. Jon says:

    I think the telling thing your last point says about human nature is that coordination problems are hard.

    If you have 250 million workers working to give up half their income to a pot to buyout their business, while the group benefits from cooperation, individual members benefit more from not giving up their income, passing a miniscule 1/250,000,000 cost to the larger group, and living a better life.

    Except of course that if everyone does that, the whole plan falls apart.

    • Jon Gunnarsson says:

      I don’t really see much of a coordination problem there, since the strategy still makes sense on an individual level even if you’re the only one following it. If your goal is to be a part owner of the firm you work for (as you would be if the plan succeeded), well then, you can still be that even if the other workers aren’t playing along. Just save up your wages and buy stock of the company you work for.

      • Tom Womack says:

        Investing your wages in the stock of the company you work for is generally regarded as exceptionally bad investment advice: you don’t want the bankruptcy of the company also to wipe out the savings block that you want to hold to keep up your expensive rent habit through the bankruptcy of the company.

        I get bonuses in company stock, so am an ~0.0001% holder of the company I work for; this is much less use to me than being the holder of 0.0250% of the votes for the workers’ council (there being about 4000 workers), and buying enough shares to get to 0.025% of the company would cost me roughly 131 years’ wage. I’ll admit that it’s an IT company whose price/earnings ratio is often considered somewhat on the high side.

        • Jon Gunnarsson says:

          My original comment was somewhat misleading, I apologise for that. I don’t think that workers buying up all the stock is a sensible strategy. (But I do think that given the values and beliefs that most socialists profess, it’s a much better strategy than trying to organise a revolution.)

          But the real point I was trying to make in my earlier post was unrelated to how good or bad the strategy is. I just argued that there isn’t much of a coordination problem with the strategy.

  50. Tracy W says:

    On vaccines and liability rules, it does strike me that there’s a fundamental imbalance in holding vaccine-makers liable for bad outcomes. Say the value of a kid’s life is at least more than $1 million, and a particular vaccine increases their chance of living by 1%. So a lower-bound on the value of the vaccine is $10,000. But the vaccine sells for only $100. If we hold vaccine manufacturers fully liable for every kid harmed by the vaccine (let alone those not-actually-harmed-at-all-as-far-as-we-can-tell), but we don’t pay them the extra $9,900 for the benefit they provide, there’s a significant misalignment of incentives. Vaccination manufacturers get only a small share of the upside, but all of the downside.

  51. Luke Somers says:

    The sledding link is broken.

    Price control regulation is definitely the wrong sort, but that doesn’t begin to make an argument against other forms of regulation. Food safety standards occurs to one. Even voluntary quality-assurance organizations would be super-awkward and ineffective. Especially since forging their mark of approval wouldn’t be illegal.

    • SanguineVizier says:

      Price control regulation is definitely the wrong sort, but that doesn’t begin to make an argument against other forms of regulation. Food safety standards occurs to one. Even voluntary quality-assurance organizations would be super-awkward and ineffective.

      Jewish/Muslim people in the U.S. are able to buy kosher/halal products, despite not a single government agency certifying products as such. I do not know about other countries, but the separation of church and state in the U.S. actually prohibits governments from setting up agencies to certify kosher or halal, yet it still gets done and companies even allow inspectors from the voluntary kosher certification organizations to visit and inspect their production lines. The primary things stopping companies from forging a kosher symbol are the same things that would stop them if the government did not exist: massive lawsuits for misrepresentation and public outcry. The certification organization could sue, as could consumers and retailers. These days it is really easy to figure out if the company is lying, since the certification organizations publish product lists, frequently on their websites. I just went to the site for the Orthodox Union Kosher Certification, and they actually have a product search tool. It would be trivially easy for someone to show misrepresentation with resources like that. This voluntary system works fairly well for a niche market, so what makes the mechanism suddenly break down when the market is everyone concerned about food safety, which is presumably everyone?

      A similar mechanism is at work in consumer electronics. I bet that it is impossible to find a TV for sale from a major U.S. retailer like Wal-Mart or Target that has not been certified by Underwriter Laboratories (UL), because major retailers have standing policies to not purchase TVs, and other electronics, that do not have the certification. It is one thing for an electronics manufacturer to have a class-action lawsuit to contend with, but it is quite another to have Wal-Mart’s legal team coming after them. Again, UL keeps comprehensive lists of the products they certify, so proving that the trademark has been forged is quite trivial.

  52. Quite Likely says:

    “How much would it cost workers to purchase their firms? The total value of the shares of all stocks listed on the New York Stock Exchange in 1965 was $537 billion. The total wages and salaries of all private employees that year was $288.5 billion. State and federal income taxes totalled $75.2 billion. If the workers had chosen to live at the consumption standard of hippies, saving half their after-tax incomes, they could have gotten a majority share in every firm in two and a half years and bought the capitalists out, lock, stock, and barrel, in five. That is a substantial cost, but surely it is cheaper than organizing a revolution. Also less of a gamble. And, unlike a revolution, it does not have to be done all at once. The employees of one firm can buy it this decade, then use their profits to help fellow workers buy theirs later.

    When you buy stock, you pay not only for the capital assets of the firm—buildings, machines, inventory, and the like —but also for its experience, reputation, and organization. If workers really can run firms better, these are unnecessary; all they need are the physical assets. Those assets—the net working capital of all corporations in the United States in 1965—totalled $171.7 billion. The workers could buy that much and go into business for themselves with 14 months’ worth of savings.”

    Depending on what he actually thought about this possibility, this is either one of the dumbest or most disingenuous things I’ve ever read.

  53. Stuart Armstrong says:

    >The alternative offered by those who deplore selfishness is always government.

    This is untrue. Consider all those commenters who call for cultural transformation, public shaming (and, more rarely, praise), alternate corporation design, etc…

    Love, trade or force is simply a false trilemma. The categories are mutable, and neither mutually exclusive nor exhaustive.

    I have to say, with all respect to the author, that my former sympathy towards this type of libertarianism has been strongly reduced by these last two posts. Has Scott been deliberately presenting a weak case? I don’t think so, but the alternative is that these arguments are much weaker that I always believed.

  54. Quite Likely says:

    “Holy !@#$, I think he has solved the problem of urban mass transit. There’s an obvious Uber parallel, but this system seems even better since it’s run by people going that direction anyway and each car will be packed, making the costs probably much cheaper. This is such an obviously good idea that I can only assume that it was regulation and the taxi lobby that prevented it from coming to pass. This paragraph probably did more to raise my confidence that there are extremely good libertarian solutions to important problems that we’re missing out on than anything else in the entire book.”

    Really? I would think the obvious reason why this hasn’t come to pass is the difficulty in starting it up. Unlike Uber, which can work as soon as the first driver signs up in a city, this would need a lot of sign ups immediately for it to be any use at all. Really for it to have a chance it seems like it would have to be mandated by *gasp* the government. Really it’s not so much a libertarian solution as it is an all-powerful social engineer’s solution, in the sense of what kind of society is likely to actually develop this sort of system.

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